U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934 (no fee required)
For the Fiscal Year Ended June 30, 1996 Commission File No. 0-13337
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
CELCOR, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 22-2497491
------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1800 Bloomsbury Ave., Ocean, N.J. 07712
- ----------------------------------------- ------------------------------
(Principal Executive Office) (Zip Code)
(908) 922-3158
------------------------------
Registrant's telephone number,
including area code:
Securities registered pursuant to Section 12(b) of the Exchange Act:
None
Securities registered pursuant to Section 12 (g) of the Exchange Act:
Common Stock, $.001 par value
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding twelve months (or for such shorter period of time that
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past ninety days.
(1) Yes [X] No ___
(2) Yes [X] No ___
The aggregate approximate market value of the voting stock held by nonaffiliates
of the Registrant, computed by reference to the price at which the stock was
sold, or the average bid and asked prices of such stock, as of September 23,
1996 was approximately $ 900,000.
As of September 17, 1996, there were outstanding 5,294,894 shares of
Registrant's common stock.
Applicable only to registrants involved in bankruptcy proceeding during the
preceding five years: Indicate by checkmark whether Registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a Court.
Yes [X] No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment of
this Form 10-KSB.
[X] Information Included ___ Information not Included
State issuer's revenues for its most recent fiscal year
$ 0 ($ __ on a pro forma basis after giving effect to the merger
of the Company with Northeast (USA) Corp.)
<PAGE>
- --------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
- --------------------------------------------------------------------------------
If the following documents are incorporated by reference, briefly
describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II,
Part III, etc.) into which the document is incorporated: (1) any annual report
to securityholders; (2) any proxy or information statement; and (3) any
prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933
("Securities Act"). The listed documents should be clearly described for
identification purposes (e.g. annual report to securityholders for fiscal year
ended December 24, 1990).
No documents have been incorporated by reference, except as exhibits.
See exhibit list on page 13.
Transitional Small Business Disclosure Format (check one):
Yes ____ No [X]
<PAGE>
- --------------------------------------------------------------------------------
PART I
- --------------------------------------------------------------------------------
Item 1. Business
Celcor, Inc. (the "Company"), was founded on January 16, 1984, to
exploit new markets created by the approval of the new "cellular" mobile
telephone technology by the Federal Communications Commission and the
deregulation of the telecommunications industry. After completion of its initial
public offering in February, 1985, the Company extended its business into other
areas in the telecommunications field, such as radio paging and (through the
acquisition of the The Pay Telephone Company, Inc. in December, 1985), the
private pay telephone marketplace and the private network switching business.
However, because the growth and profitability of its operations fell
short of expectations and because of the limited success of a second public
financing in July of 1987, the Company, beginning in 1987, began selling off or
closing some of its operations. By February, 1991 the Company had ceased or sold
off all of its operations.
Unable to obtain financing to repay debt or fund operations of any
kind, the Company, in April of 1991, filed for protection under Chapter 11 of
the United States Bankruptcy Code (Bankruptcy Court - District of N.J., Newark,
N.J.). In March of 1992, the Company's only subsidiary, The Pay Telephone
Company, Inc., filed a separate Chapter 7 bankruptcy petition and was thereafter
liquidated. There was no distribution to creditors.
Pursuant to a Stock Purchase Agreement (the "Agreement"), dated June
20, 1991 and amended October 29, 1991, between the Company and Majestic
International, Inc. ("Majestic"), the Company was able to secure limited equity
capital and emerge from bankruptcy. The Agreement, among other things, provided
for the sale, by the Company to Majestic, of that number of shares of the
Company's common stock which would give Majestic a 49% interest in the Company.
The purchase price for the shares was $155,000. Also, pursuant to the Agreement,
the Company filed a reorganization plan (the "Plan") with the Bankruptcy Court,
which provided for the proceeds received from Majestic from the sale of the
shares to be used to pay administrative claims associated with the bankruptcy
and to settle all existing debts of the Company. On May 28, 1992 the Plan was
approved by the Bankruptcy Court. Subsequently, 8,242,000 shares (1,648,400
shares after giving effect to a subsequent one for five stock split) were sold
to Majestic and 824,200 shares (164,840 shares on a post split basis) were
issued to two "finders" on July 28, 1992 (according to closing documents the
finders were identified as Lyncroft Corp. (618,150 pre-split shares) and Yung
Hua Ho, (206,050 pre-split shares), parties, who at that time were not related
to the Company. However, Lyncroft is an "affiliate" of Northeast (USA) Corp.
("Northeast") with which the Company has recently merged - see below). The end
result was the emergence of the Company from bankruptcy with virtually no assets
or liabilities.
At the time of its emergence from bankruptcy, the Company had no
operations and no revenues but began to seek new business opportunities,
especially with entities having business interests or operations in and with the
People's Republic of China. In order to raise capital to fund its immediate
limited operations, and to become more attractive to a potential operational
partner, the Company raised $825,000 during May and June of 1994 in a private
placement of securities. The private placement, sold to a group of individual
investors, consisted of the sale of 275,000 shares of 8% Series C Convertible
Preferred Stock (the "Preferred Stock") at $3 per share. Each share is
convertible into 3 shares of the Company's common stock.
In furtherance of the Company's business objective, the Company, on
March 15, 1995, executed an Agreement and Plan of Merger (the "Merger
Agreement") with Northeast (USA) Corp. ("Northeast") and its stockholders.
Northeast, a privately held company, had established business relationships with
entities located in the People's Republic of China. Under the Merger Agreement,
Northeast was merged with and into the Company with the Company continuing as
the surviving corporation (the "Merger"). All of the common stock of Northeast
issued and outstanding immediately prior to the consummation of the Merger was
converted into shares of the Company's common stock. All of the Company's common
stock and Preferred Stock which was issued and outstanding prior to the
consummation of the Merger remained outstanding and did not change as a result
of the Merger.
The Merger became effective on August 1, 1996. At that time, the 175
outstanding shares of Northeast common stock were converted, by virtue of the
Merger, into the right to receive 1,750,000 shares of the Company's common
stock.
Business of Northeast
Northeast was organized in February, 1993 in the expectation of
pursuing business opportunities in China for the production and distribution of
pharmaceutical and body care products.
In May of 1994, Northeast entered into a joint venture agreement with
Northeast General Pharmaceutical Factory ("Northeast General Pharmaceutical"), a
state owned Chinese pharmaceutical manufacturer located in Shenyang, China.
Pursuant to the joint venture agreement, the parties created Shenyang United
Vitatech as a Chinese limited company ("United Vitatech"). The stated purpose of
the joint venture is to manufacture and sell medicine, nutrition, health and
cosmetic products. The joint venture agreement provided that United Vitatech
would have an initial capitalization of U.S. $5.75 million, U.S. $2.5 million to
be contributed by Northeast General Pharmaceutical and the balance of U.S. $3.25
million to be provided by Northeast through contributions of cash and
technology. Of the amount to be contributed by Northeast, U.S. $2.1 million was
to be in cash (payable in three installments in July, 1994, June 1995 and
December, 1995), with the balance of the capital to be in the form of a
contribution of proprietary technology and formulae for the production of
vitamin products. At the present time, $1.0 million in cash has been contributed
to United Vitatech by Northeast. Northeast has deferred the installment payments
which were due in June and December 1995 until the joint venture has a need for
the funds. United Vitatech expects to use these funds to build a new factory in
Shenyang. Since other temporary production facilities have been provided by
Northeast General Pharmaceutical, there is no immediate need to build the new
factory. Of the amount which has been contributed to date by Northeast General
Pharmaceutical, $750,000 was in cash and the balance consisted of a contribution
to the venture of the development rights (valued at $1,750,000) to build an
office and factory complex on an 84,000 square meter parcel of land located in
Shenyang, China. In exchange for its capital contribution, Northeast received a
56% interest in the joint venture and elects 4 of 7 directors.
Under the joint venture agreement, Northeast General Pharmaceutical is
responsible for (i) obtaining all government approvals required for the joint
venture to operate, (ii) organizing the design and construction of joint venture
production facilities, (iii) providing initial manufacturing capability, and
(iv) handling customs and import requirements for equipment which the joint
venture may acquire.
Northeast is obligated under the agreement to provide (i) production
management, (ii) employee training and construction design for a new building,
and (iii) technology. The agreement has a 30 year term, but may be extended by
applying to the Chinese government for an extension. The vitamin formulae and
technology provided to the joint venture by Northeast was acquired by it from
Mannion Consultants (one of Northeast's shareholders) under a technology
agreement. Under this agreement, Mannion transferred to Northeast various
formulas and procedures for making a variety of health care, vitamin and
cosmetic products in exchange for 80 shares of Northeast's common stock
(approximately 46% of Northeast's outstanding shares). Mannion is a privately
held corporation based in Taiwan.
United Vitatech has received Chinese government approval to produce a
chewable vitamin C tablet and is seeking additional government approvals for a
multi-vitamin and prenatal vitamin. The Vitamin C tablet is currently being
manufactured for the joint venture by Northeast General Pharmaceutical, but once
other products are approved, the joint venture intends to construct its own
factory in Shenyang to produce its own products.
Under the current manufacturing agreement, Northeast General
Pharmaceutical provides labor and equipment to manufacture the vitamins and
Northeast provides managerial and technical support. Plans to construct an
office and factory complex on the land contributed to the venture in Shenyang
are now being reviewed by Chinese regulatory authorities and it is anticipated
that construction will begin in calendar year 1997. The facility will be built
in stages, with a portion of an office complex and production and warehouse
space built first.
Initially, United Vitatech will seek to distribute its products
primarily in Liao Ning Province and the surrounding region. Located in northeast
China, this region (formerly known as Manchuria) has a population in excess of
200 million people and is believed by management to be among the most promising
in China for the distribution of consumer products. Northeast has initiated an
advertising campaign for its products on Chinese television and recognized its
first revenues in the latter part of fiscal 1995.
Northeast also markets a line of body care products under the trade
name "Jennifer." These products, primarily for skin and hair care usage, have
their ingredients encapsulated in a soft gel form. These capsules are broken
open by the user and applied to a person's face or hair (depending on the
product). Northeast has done limited test marketing of the product in the U.S.,
but most of its sales have been through distributors located in Korea, Taiwan
and Puerto Rico. Northeast's subsidiary, United Vitatech, has also imported the
Jennifer product line into China, but to date, sales in China have not been
significant. Test marketing of this product began in Shenyang, China in March,
1995 and test marketing expanded to Beijing in May, 1995.
Recently, the Company has been holding discussions with a major
manufacturing company. Because the Company's management has business
relationships in the Far East, the manufacturing company has expressed an
interest in having the Company form a joint venture with it in Taiwan for the
purpose of marketing and installing diesel to natural gas engine conversions.
Initial conversions will be in busses, but the Company believes there are other
uses for this technology. The Company believes there is a significant market
potential in Taiwan for this product due to the recognition by the Taiwanese
government of the need to improve air quality by reducing emissions. The Company
is continuing to evaluate this opportunity.
The Company currently employs approximately 10 persons, (4 in sales and
6 in clerical and administrative positions) most of whom are employed in
Shenyang, China. The Company's officers provide services to the Company on a
part-time basis.
Current Status of Activities in China
United Vitatech has business licenses to sell pharmaceutical and
cosmetic products in China. United Vitatech's chewable vitamin C tablet has been
approved for sale by Chinese regulatory authorities and approvals for three more
vitamin products (pre-natal, adult multi-vitamin and a senior multi-vitamin) are
expected within the next several months. The final required data has been
submitted to Chinese authorities for these new products.
The initial supply of chewable vitamin C tablets was produced for
United Vitatech by its 44% stockholder, Northeast General Pharmaceutical. The
last production run occurred in December of 1995 and United Vitatech is still
working off of this inventory. It is believed that this supply will last another
six months at current sales levels.
United Vitatech markets both the chewable vitamin C product and the
"Jennifer" line of body care products in the Shenyang, Beijing and Shanghai
areas. Chewable vitamins are sold mainly to pharmacies and hospitals and the
Jennifer line is sold mainly to department stores. Depending on the geographic
area, United Vitatech sells to customers on either a direct basis or through
independent distributors. United Vitatech is currently looking to expand its
distribution channels by pursuing an arrangement with another company which
already has such channels in place in China for similar products.
Squibb and American Cyanamid ("Centrum" brand) currently sell vitamin
products in China and compete with United Vitatech. These companies have
substantially greater resources than United Vitatech. Competitors selling
products similar to the Jennifer line have generally been smaller companies.
Due to a lack of funds, United Vitatech has been unable to (1) mount a
sustained marketing effort and (2) construct its own production facilities, both
of which it believes are necessary for growth. Currently, United Vitatech
operates on a cash flow break-even basis. The Company believes that once
approval from the Chinese regulatory authorities is received for the three
pending vitamin products, it will be able to attract additional capital to
expand United Vitatech's operations.
Recently, Northeast General Pharmaceutical has appointed a new director
to the board of United Vitatech. The Company views this as an opportunity to
revitalize its relationship with Northeast General Pharmaceutical and perhaps
renegotiate the existing joint venture agreement to the mutual benefit of the
Company and Northeast General Pharmaceutical.
No R&D is presently being done by United Vitatech or the Company. The
Company owns the rights to several additional proprietary products which it may
produce and market in the future.
Taiwan Diesel/Natural Gas Project
Shortly, the Company expects to enter into a joint venture or similar
agreement with a manufacturer whose stock is listed on the New York Stock
Exchange. The purpose of the venture will be to set up installation centers in
Taiwan to market and install diesel/natural gas conversions (initially) to the
engines in buses. Currently, plans are to test such equipment on buses in Taiwan
for its air pollution reduction capability. If the outcome of the tests is
acceptable, the Company expects to receive a substantial order from a Taiwanese
bus company (owned by the brother-in-law of Jennifer Wu, president of the
Company and through Dziou Tai Associates, a 5.6% stockholder of the Company).
The Company then plans to form a Taiwanese subsidiary for the purpose of (1)
operating this business in Taiwan, (2) applying to the Taiwanese government for
product endorsement and (3) raising equity capital in Taiwan. There are 20,000
buses in Taiwan and the Company believes that the product can be successfully
marketed because of a significant problem and growing concern about air quality
in Taiwan. Additionally, the Company believes that if it can obtain the
endorsement of the Taiwanese government, some subsidy can be obtained for
conversions, further enhancing the marketing effort.
Item 2. Properties
The Company leases office and warehouse space in College Point, N.Y. on
a month to month basis and owns a vacant parcel of land in Flushing, N.Y., which
is currently under contract of sale and is expected to close before the end of
October, 1996. See "Management's Discussion and Results of Operations -
Financial Plan for Next 12 Months". United Vitatech currently leases
approximately 2300 square feet of office and residence space under a short term
lease in Shenyang, China. United Vitatech also holds development rights to
develop an 84,000 square meter parcel of land in Shenyang on which it expects to
build production facilities and office space next year.
Item 3. Legal Proceedings
There are presently no legal proceedings pending or threatened against
the Company which, if adversely decided, could have a material adverse affect on
the Company, its operations or prospects.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of shareholders during the fourth
quarter of the Company's fiscal year.
PART II
Item 5. Market for the Registrant's Common Stock and Related Security Holder
Matters.
The Company's common stock is traded over-the-counter and its
quotations are carried in the National Quotation Bureau's daily "Pink Sheets."
The following table shows the range of high and low bid or last trade
quotations for the Company's common stock in the over-the-counter market as
reported to the Company by the National Quotation Bureau Incorporated. No review
of the daily Pink Sheets for the period indicated has been undertaken by the
Company. The quotations reflect prices between dealers, without retail mark-ups,
mark-downs or commissions and may not necessarily represent actual transactions
or be indicative of prices at which the Company's stock was traded.
Fiscal Year Fiscal Qtr. Ended Low Bid High Bid
1995 September 30, 1994 $ .12 $ 1.25
December 31, 1994 .25 .87
March 31, 1995 .25 .87
June 30, 1995 .25 .87
1996 September 30, 1995 $ .12 $ .37
December 31, 1995 .12 .62
March 31, 1996 .31 1.00
June 30, 1996 .31 .87
The number of record holders of the Company's common stock as of
September 17, 1996 was approximately 350, however, the Company believe that
there are substantially more beneficial holders.
Dividend Policy.
The Company has not paid any dividends on its common stock since its
inception. The Company anticipates that in the foreseeable future, earnings, if
any, will be retained for use in the business or for other corporate purposes,
and it is not anticipated that cash dividends will be paid on its common stock.
Item 6. Management's Discussion and Analysis of Results of Operation
Liquidity and Capital Resources
Since its emergence from Chapter 11 bankruptcy proceedings at the
beginning of the 1993 fiscal year, and until the completion of its merger with
Northeast, the Company has had no operations or business. Subsequent to the
bankruptcy reorganization, the Company had virtually no assets or liabilities
and its need for working capital has been minimal. At the time of its emergence
from bankruptcy, the Company was able to secure $40,000 in loans from a
non-affiliated private investor, which were sufficient to fund the Company's
minimal administrative expenses. In order for the Company to actively pursue its
business plan to seek opportunities, such as mergers, acquisitions or joint
ventures, more substantial permanent financing was required. In fiscal 1994, the
Company was able to secure $780,000 in equity capital through the private
placement of the Preferred Stock. The holder of the $40,000 loan payable by the
Company converted the loan and accrued interest to shares of the Preferred
issue, making the total Preferred issuance $825,000. Of these proceeds, the
Company loaned Northeast $700,000 in anticipation of its merger with Northeast.
With the Merger with Northeast now consummated, the Company must raise
significant additional capital with which to expand and operate its business.
The Company hopes to raise capital for the combined entity through a private
placement of securities utilizing both domestic and foreign investment sources.
Presently, the Company has had to rely on short term loans from the brother of
the Company's President, which totaled approximately $66,000 at June 30, 1996.
This individual has expressed a willingness to purchase shares of the Company's
common stock in exchange for this debt. It is unknown whether the Company will
be able to continue to raise funds in this fashion. Should the Company not be
able to raise additional funds, it would be unable to operate in any capacity.
Because of the above mentioned liquidity concerns, the Company's
independent accountants, in their report, have issued an explanatory paragraph
regarding the Company's ability to carry out its business plans.
Financial Plan for Next 12 Months
Currently, there is no working capital available to support the
Company's U.S. operations, including those of Northeast,. The Company has scaled
operations back to a bare minimum. Officers are not receiving any cash
remuneration. Cash required to fund minimal operations is being provided, for
the most part, by the brother of Jennifer Wu, the Company's president. It is not
known how much longer this funding source will be available. In order to retire
some of its past due accounts payable and pay off a $200,000 bank loan which is
due, Northeast has entered into a contract to sell a parcel of land which it
owns in Flushing, N.Y. Northeast expects that it will net approximately $100,000
from the sale after paying commissions, back real estate taxes, closing costs
and the bank loan. After reducing accounts payable, the Company believes the
remaining capital could fund the Company's limited operations through the end of
calendar 1996.
Funding past this date, at this time, appears to be dependent on the
initial success of the diesel/natural gas engine conversion project in Taiwan.
Funding for the growth of the Company's Chinese subsidiary, United Vitatech is
dependent upon the receipt of Chinese governmental approvals for three new
vitamin products of the Company.
Statement of Operations
Fiscal 1996 compared to Fiscal 1995
During both the 1995 and 1996 fiscal years, the Company was actively
involved in consummating its Merger Agreement with Northeast (USA) Corp., with
which it signed a letter of intent on August 15, 1994 and a Merger Agreement on
March 15, 1995. However, during the 1996 fiscal year, the Company incurred
substantial legal and professional fees and other costs in conjunction with the
preparation and solicitation of proxies from the Company's stockholders voting
on the merger. These additional costs and expenses increased the loss in the
1996 period as compared to the 1995 period.
Item 7. Financial Statements and Supplementary Data.
The Company intends to file financial statements by amendment in the
future at such time as it has funds to pay an accounting firm to audit such
statements.
Item 8. Changes in and Disagreements with Accountants
The Company does not presently have the funds available to pay the
accounting fees associated with an audit. The Company currently owes BDO Seidman
a significant amount of money for past services and has been advised that BDO
Seidman will do no further work for the Company.
PART III
Item 9. Directors and Executive Officers of the Registrant.
Directors.
Directors are elected by the shareholders and serve until their
successors are elected and have qualified or until a director's earlier death,
resignation or removal. Directors were most recently elected in January 25, 1996
at the special meeting of shareholders held at such time to approve the Merger
with Northeast.
Set forth below are the names and ages of the directors, and executive
officers of the Company, their positions with the Company, and their business
experience, including their principal occupations at present and during the past
five years.
Director of
Present The Company
Name Age Position Since
Jennifer Lo Wu (1) 43 President and 1996
Chairman
Stephen E. Roman, Jr. (2) 48 Director, 1994
Vice President,
CFO and Secretary
Michael Hsu (3) 56 Vice President and 1996
Director
David Chow (4) 36 Director 1993
Eugene Cha (5) Director 1996
Frank Nelson (6) 74 Director 1996
Chin-Sung (Joe) Chen(7) 44 Director 1996
____________________
(1) Jennifer Lo Wu is a trained pharmacist and from February, 1993 until
the effective date of the Merger served as chairman of Northeast. Ms. Wu
also serves as Chairman of Shenyang United Vitatech Ltd., Northeast's Chinese
joint venture. Prior to her association with Northeast, from 1983 to 1991, Ms.
Wu was a real estate agent in Flushing, N.Y. Ms. Wu is married to Dr. Nanshan
Wu, who is active in the operations of Northeast. Ms. Wu is the sole stockholder
of Lyncroft Corp., which previously owned 123,630 shares of the Company and has
acquired, through Northeast's merger with the Company, by virtue of its
ownership of Northeast Common Stock, an additional 100,000 shares of the
Company's common stock. Ms. Wu is also the daughter of Su Shi Lo, the
controlling stockholder of Majestic, one of the Company's largest stockholders.
(2) Stephen E. Roman, Jr. served as Vice President and Chief Financial
Officer of the Company for the period from April 1984 to June 1994. He has also
served as Secretary since 1994. From June 1994 to January 1996, Mr. Roman
was president of the Company. In January 1996, Ms. Lo Wu succeeded Mr. Roman
as president and Mr. Roman became vice president and chief financial officer.
For the last five years he has served on a part-time basis. Mr. Roman is a
certified public accountant and performs similar services for other business
entities.
(3) Michael W. Hsu served as Vice President-Finance from June of 1994 to January
1996 on a part-time basis. In January 1996 he became vice president. He has been
a self-employed certified public accountant for the past ten years.
(4) David Chow is Managing Director of Center Laboratories, Taiwan, and has held
this position since 1980. He is also Managing Director of Center Pharmaceutical
Co., Ltd., People's Republic of China and has served in this capacity since
1992. Additionally, in 1993 Mr. Chow became Chairman of the Taiwan
Pharmaceutical Development Association and in 1995, Director of the GMP
Committee of the China Pharmaceutical Industrial Association.
(5) Eugene Cha is an attorney and since 1987 has been a partner in the law firm
Cha & Pan with offices in N.Y. and Beijing, China. He holds law degrees from
both National Taiwan University and the University of Michigan.
(6) Frank Nelson is president of Promedica, Inc., and has served in this
capacity for more than 10 years. Promedica is a publicly traded medical devices
manufacturing and marketing company. From 1988 to 1994, Mr. Nelson was also
president of Natural Pharmaceutical International, Inc., a natural
pharmaceutical products research and development company. From 1992 to 1994, Mr.
Nelson served as Chairman of Health Guard International, Inc., a health food
manufacturing and marketing company.
(7) Chin-Sung (Joe) Chen is presently general manager of Hyscios Pharmacy
International, Co., Ltd., a distributor of pharmaceutical and skin care products
based in Taipei, Taiwan and has served in this capacity since 1994. Prior to his
association with Hyscios, Mr. Chen was employed for approximately 16 years by
Lederle, where he served in a variety of increasingly responsible positions.
From April 1991 to November 1993, Mr. Chen was national marketing manager of
Lederle, Taiwan.
The Board of Directors does not presently have an audit, compensation
or nominating committee. There were two meetings of the Board of Directors
during the fiscal year ended June 30, 1996.
Section 16 Compliance
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company, the Company believes that Messrs. Chow and Hsu have
each filed a Form 3 in their capacity as officers or directors of the Company,
but that such filings were not made on a timely basis. Neither individual owns
any shares of the Company's common stock. In addition, the Company believes that
Majestic International. Inc., which is believed to be the beneficial owner of
more than 10% of the outstanding common stock of the Company, has filed a Form 3
with respect to such beneficial ownership, but that such filing was not made on
a timely basis. Mr. Chin-Sung Chen, who became a director of the Company in
January, 1996, has not filed a Form 3, but to the knowledge of the Company, Mr.
Chen does not own any shares of the Company's common stock. The Company further
believes that Verchi Holdings Limited, owns in excess of 10% of the outstanding
common stock and has not filed a Form 3 with respect to such beneficial
ownership. Upon the consummation of the Merger, Mannion Consultants became the
holder of approximately 15% of the Company's common stock but has not filed a
Form 3 with respect to such ownership.
Item 10. Executive Compensation
Listed below is the total compensation paid to the executive officers
and directors of the Company for all services rendered to the Company in all
capacities during the fiscal year ended June 30, 1996. The amount paid to all
directors and officers as a group totalled $32,727.
Total cash remuneration paid
-----------------------------------------
Stephen E. Roman, Jr.
Vice President, Secretary and Director $30,000 (1)
All other Officers and Directors $ 2,727 (2)
- -------------
(1) Includes $10,000 which is owing but has not yet been paid. Mr. Roman has
agreed to accept shares of the Company's common stock in satisfaction of this
obligation.
(2) Represents amounts paid or accrued to Mr. Cha's law firm for services
rendered to Northeast.
The Company has no stock option plan, bonus, retirement, royalty or
similar plans in effect. However, one or more such plans may be adopted in the
future. Except as noted above, none of the officers or directors of the Company
has been granted any stock option, stock appreciation right, or stock award, nor
are there any deferred compensation arrangements. There are no employment
contracts or change of control agreements in effect.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of the Company's
$.001 par value common stock owned by each person who, as of September 17, 1996,
owns of record, or is known by the Company to own beneficially, more than 5% of
the Company's common stock, as well as the ownership of such shares by each
director and executive officer of the Company and the shares beneficially owned
by all officers and directors as a group.
Name and Address of Amount and nature of Percent
Beneficial Owner Beneficial Ownership of Class
- ------------------------------- ------------------------- ----------------
Mannion Consultants, Ltd. 800,000 15.0
No 2, 4th Floor Alley 23
Lend 290
Chung Shon N. Road
Taipei, Taiwan
Majestic International Inc. 633,400 11.9
No 3 14th Floor
No 535
Cheng-Kuo
Third Road
Kaohszung, Taiwan ROC
Fowler Holdings, Inc. 450,000 8.4
3F No 1-4
Alley 14 Lane 154
Ho-Hsing Road
Mo-Chia Area
Taipei, Taiwan ROC
Shenyang Tianfa Social 450,000 8.4
Service Company
No. 37 Zhong Gong Bei Street
Tiexi District
Shenyang, People's Republic
of China
Verchi Holdings Limited 550,000 10.3
Room 312, Entrance 3, Bldg. 14
Compound 3, Jingouhe Road
Wukesong-Haidian District
Beijing, People's Republic
of China
Dziou Tai Associates 300,000 5.6
63-48 253 St.
Little Neck, New York 11362
Stephen E. Roman, Jr. 64,153 (1) 1.2
25 Hillside Road
Shark River Hills, NJ 07753
David Chow 0 0
Shinwi Road Section 2
No. 34, Taipei, Taiwan
Jennifer Lo Wu 223,630 (2) 4.2
165 Grist Mill Lane
Great Neck, NY 11023
Michael Hsu
136-21 Roosevelt Ave
Flushing, NY 11354 0 --
Frank A. Nelson
3789 S. 500 West
Salt Lake City, Utah 84115 0
Chin-Sung (Joe) Chen
7th Floor
No 571
Ming Shui Road
Taipei, Taiwan (3) --
Eugene Cha 0 --
36 W. 44th Street
New York, NY 10036
Current Executive officers and 287,783 5.4
Directors as a Group (7 persons)
- ----------------
(1) Includes 48,000 shares issuable to Mr. Roman in lieu of cash compensation
and in satisfaction of loans due him from the Company.
(2) Includes shares owned by Lyncroft Corp., a corporation of which Ms. Wu is
the sole shareholder.
(3) Mr. Chen holds 70,000 shares of the Company's Preferred Stock, which are
convertible into 210,000 shares of common stock of the Company.
The Company is not aware of any arrangements which may result in a change
of control of the Company.
Item 12. Certain Relationships and Related Transactions
The Company, as of August 1, 1996, has merged with Northeast (USA) Corp.
(see Section I - "Business"). The Company previously loaned Northeast the sum of
$700,000, which was used by Northeast in furtherance of its joint venture in
China. This loan was cancelled upon the consummation of the Merger.
The father of Jennifer Lo Wu, Su Shi Lo, is the controlling stockholder of
Majestic International, Inc., an 11.9% stockholder of the Company. Additionally,
Chau-Rong Lo, the brother of Jennifer Lo Wu, has loaned the Company, as of June
30, 1996, a total of approximately $66,000, for which Dr. Lo has agreed to
purchase shares of the Company's common stock. Mr. Chau-Rong Lo also controls
Dziou Tai Associates, which holds approximately 5.6% of the Company's
outstanding common stock.
Eugene Cha, a director of the Company, is a member of Cha & Pan, a law frim
which has provided legal services to Northeast in the past and which may provide
services to the Company in the future.
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) 1. The following financial statements are included in Part II, Item 7 of
this report:
None
2. Exhibits
2.1 Agreement and Plan of Merger among Celcor, Inc., Northeast (USA) Corp.,
and the Stockholders of Northeast (USA) Corp.(5)
3.1 Certificate of Incorporation, as amended, of the Company (1) (2) ((4)
3.2 By-laws of the Company (1) (3)
4.1 Certificate of Designations, Preferences and Rights of Series
C 8% Convertible Preferred Stock of Celcor, Inc.
10.1 Promissory Note, Pledge Agreement and Note Extension Agreement between
Celcor, Inc., Northeast (USA) Corp. and the Stockholders of Northeast
(USA) Corp. (3)
10.2 Joint Venture Contract between China Northeast Pharmaceutical
Company and U.S. Lyncroft Company (translated from the Chinese)
creating United Vitatech.
10.3 Contract of Shenyang United Vitatech Pharmaceutical Ltd. (translated
from the Chinese)
10.4 Regulations of Shenyang United Vitatech Pharmaceutical Ltd. (translated
from the Chinese)
10.5 Agreement dated December 26, 1993 between Mannion Consultants Ltd
and Northeast (USA) Corp.
- ---------------
(1) Incorporated by reference to the Company's Registration Statement
No. 2-94663.
(2) Incorporated by reference to the Company's Form 10-K for the
year ended June 30, 1986. Commission File No. 0-13337.
(3) Incorporated by reference to the Company's 1986 Proxy Statement
dated November 7, 1986. Commission File No. 0-13337.
(4) Incorporated by reference to the Company's Registration Statement
No. 33-12084.
(5) Incorporated by reference to the Company's Form 10-K for the year
ended June 30, 1995.
(b) No reports on Form 8-K were filed by the Company during the quarter ended
June 30, 1996.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CELCOR, INC.
Registrant
Date: October 14, 1996 By:/s/Jennifer Lo Wu
----------------------------
Jennifer Lo Wu
President and Chairman
of the Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: October 14, 1996 By: /s/Stephen E.Roman, Jr.
---------------------------
Stephen E. Roman, Jr.
Vice President - Finance
Principal Accounting Officer
Secretary and Director
Date: October 14, 1996 By: /s/Michael W. Hsu
----------------------------
Michael W. Hsu
Vice President and
Director
Date: October 14, 1996 By: /s/Frank Nelson
----------------------------
Frank Nelson
Director
Date: October 14, 1996 By:/s/Jennifer Lo Wu,
---------------------------
Jennifer Lo Wu, Chairman
CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF
SERIES C 8% CONVERTIBLE PREFERRED STOCK OF
CELCOR, INC.
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
Celcor, Inc., a Delaware corporation (the "Corporation"), certifies that
pursuant to the authority contained in Article FOURTH of its Certificate of
Incorporation, as amended, and in accordance with the provisions of Section 151
of the General Corporation Law of the State of Delaware, its Board of Directors
has adopted the following resolution creating a series of its Preferred Stock
designated as Series C 8% Convertible Preferred Stock.
RESOLVED, that a series of 1,000,000 shares of the class of authorized
Preferred Stock of the Corporation, par value one mill ($.001) per share, be
hereby created, said shares to be designated as Series C 8% Convertible
Preferred Stock ("8% Convertible Preferred Stock"), and the powers and relative,
participating, optional and other special rights of the shares of such series
and the qualifications, limitations or restrictions thereof are as follows:
(a) The stated value of the 8% Convertible Preferred Stock
shall be Three Dollars ($3.00) per share. The holders of 8% Convertible
Preferred Stock, in preference to the holders of the Common Stock of the
Corporation, shall be entitled to receive dividends at the rate of $.24 per
share per annum, and no more, the same being equal to 8% of the stated value per
share thereof, and no more, payable on June 30, 1997 and quarterly thereafter.
Such preferential dividend on shares of 8% Convertible Preferred Stock shall
commence to accrue from the date of issue of such shares.
Preferential dividends on the 8% Convertible Preferred Stock shall be
deemed to accrue from day to day. Such preferential dividends shall be
cumulative, and the deficiency, if any, shall be fully paid or declared and set
apart before any dividend shall be paid upon or declared or set apart for the
Common Stock. Accumulations of dividends on shares of 8% Convertible Preferred
Stock shall not bear interest.
(b) The 8% Convertible Preferred Stock shall be preferred as
to assets over the Common Stock, so that in the event of the voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
holders of 8% Convertible Preferred Stock shall be entitled to have set apart
for them, or to be paid out of the assets of the Corporation, before any
distribution is made to or set apart for the holders of the Common Stock, an
amount in cash equal to Three Dollars ($3.00) per share plus a sum equal to
accrued and unpaid dividends thereon, whether or not declared, and no more.
(c) Except as otherwise herein or by law provided, the 8%
Convertible Preferred Stock shall not be entitled to vote on any matter
submitted to a vote of stock-holders of the Corporation.
(d) Each share of the 8% Convertible Preferred Stock may be
converted, at the option of the holder thereof, at any time during the period
beginning July 1, 1994 and ending June 30, 1997 into three (3) shares of fully
paid and nonassessable Common Stock of the Corporation, subject to adjustment,
however, as hereinafter in paragraph (e) provided. Upon any such conversion of
shares of 8% Convertible Preferred Stock no allowance or adjustment shall be
made with respect to the dividends upon either class of Stock.
Such option to convert shares of 8% Convertible Preferred
Stock into Shares of Common Stock may be exercised by, and only by, surrendering
for such purpose to the Corporation, at the office of the Corporation or that of
one of its Transfer Agents for its Common Stock, certificates representing the
shares to be converted, duly endorsed or accompanied by proper instruments of
transfer, if so required by the Corporation or any such Transfer Agent. At the
time of such surrender, the person exercising such option to convert shall be
deemed to be the holder of the shares of Common Stock issuable upon such
conversion, notwithstanding that the stock transfer books of the Corporation may
then be closed or that certificates representing such shares of Common Stock
shall not then be actually delivered to such person.
The term "Common Stock," as used in paragraphs (a)-(k), shall
mean Common Stock of the character authorized at the date of the initial
issuance of the 8% Convertible Preferred Stock or, in case of a reclassification
or exchange of such Common Stock, shares of the stock into or for which such
Common Stock shall be reclassified or exchanged and all provisions of paragraphs
(a)-(k) shall be applied appropriately thereto and to any stock resulting from
any subsequent reclassification or exchange thereof.
(e) The number of shares of Common Stock into which the shares
of 8% Convertible Preferred Stock may be converted shall be subject to
adjustment from time to time in certain instances as follows:
(1) The term "Conversion Price" as used herein means an amount
such that when the sum of $3.00 is divided by such Conversion Price, the result
is the number of shares of Common Stock into which one share of 8% Convertible
Preferred Stock will be converted. The initial Conversion Price hereunder shall
be $1.00.
(2) If at any time the outstanding shares of Common Stock of
the Corporation shall be subdivided or combined into a greater or smaller number
of shares (by way of reclassification or split up of shares or in any other
manner), then the conversion Price shall be multiplied by a fraction, the
numerator of which is the total number of issued and outstanding Common Shares
prior to such subdivision or combination and the denominator of which is the
total number of issued and outstanding shares of Common Stock immediately after
such subdivision or combination.
(3) If at any time there is declared on the Common Stock of
the Corporation any dividend payable in Common Stock of the Corporation, then
the Conversion Price shall be multiplied by a fraction, the numerator of which
is the total aggregate number of shares of Common Stock issued and outstanding
prior to such dividend, and the denominator of which is the total number of
issued and outstanding shares of Common Stock immediately after such dividend.
(4) If the Corporation shall issue or sell any shares of
Common Stock (excluding certain shares hereinafter set forth in clause (5) of
this paragraph (e)) for a consideration per share other than the Conversion
Price in effect immediately before the time provided for such adjustment, said
conversion price shall be adjusted to a price determined by dividing:
(i) an amount equal to (A) the number of issued shares of
Common Stock immediately prior to such issuance or sale multiplied by the then
current conversion price plus (B) the consideration, if any, received by the
Corporation upon such issuance or sale and plus (C) the net excess, if any, of
the aggregate proceeds actually received from the prior sale or issuance of
Common Stock (except as provided in clause (5) of this paragraph (e)) over the
then current conversion price less (D) the deficiency in the aggregate proceeds,
received or deemed to be received, from the prior sale or issuance of Common
Stock (except as provided in clause (5) of this paragraph (e)) under the then
current Conversion Price (excluding the consideration received under (B) above)
all as determined since the last required change in the Conversion Price as a
result of this formula, by
(ii) the number of issued shares of Common Stock immediately
after such issuance or sale.
After such calculation, the number of shares of Common Stock deliverable
upon conversion of each share of the 8% Convertible Preferred Stock shall be the
quotient obtained by dividing $3.00 by the Conversion Price so adjusted;
provided, however, that notwithstanding the foregoing, no adjustment shall be
made pursuant to this clause (4) which would result in an increase in the
Conversion Price over $1.00.
For the purpose of this clause (4), the following provisions shall be
applicable:
(aa) In case of the issuance or sale of Common Stock for cash,
the consideration shall be deemed to be the cash proceeds received by the
Corporation before deducting any discounts, commissions or other expenses
incurred in connection therewith. In the case of issuance or sale of Common
Stock (otherwise than upon conversion or exchange of securities by their terms
convertible or exchangeable into Common Stock) for a consideration other than
cash, the amount of such consideration shall be deemed to be the fair value
thereof as determined by the Board of Directors, irrespective of the accounting
treatment thereof.
(bb) If the Corporation issues options or rights to subscribe
for shares of Common Stock or issues securities convertible into, exchangeable
for, or carrying rights of purchases of, shares of Common Stock, and if the
consideration per share of the Common Stock deliverable upon exercise of such
options or rights or upon conversion or exchange of such securities (determined
by dividing the total amount received or receivable by the Corporation as
consideration for the granting of such options or rights or the issue or sale of
such convertible or exchangeable securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Corporation upon the
exercise, conversion or exchange thereof, by the total maximum number of shares
of Common Stock issuable upon such exercise, conversion or exchange), is less
than the conversion price in effect as to the 8% Convertible Preferred Stock
immediately prior to such issuance:
(i) In the case of options or rights, the shares of Common
Stock deliverable upon their exercise shall be considered to have been issued at
the time of issuance of such options or rights and the aggregate consideration
shall be the minimum purchase price payable to the Corporation upon exercise of
such option or rights plus any additional consideration received by it for such
options or rights at the time of their issuance.
(ii) In the case of convertible or exchangeable securities,
the maximum number of shares of Common Stock initially deliverable upon their
conversion or exchange shall be considered to have been issued at the time of
issuance or sale of such securities and for a consideration equal to the
consideration received by the Corporation for such securities, before deducting
any discounts, commissions or other expenses in connection with the issuance and
sale of such securities, plus the minimum additional consideration, if any,
receivable by the Corporation upon the conversion or exchange thereof.
(iii) No further adjustment of a conversion price shall be
made upon the actual issue of such Common Stock, upon the exercise of such
rights or options or upon the conversion or exchange of such convertible or
exchangeable securities.
(iv) Upon the expiration of such options or rights, or the
termination of such right to convert or exchange, the conversion price shall
forthwith be readjusted to such conversion price as would have obtained had the
adjustment made upon the issuance of such options, rights, or convertible or
exchangeable securities been made upon the basis of the issuance or sale of only
the number of shares of Common Stock actually issued upon the exercise of such
options or rights or upon the conversion or exchange of such securities.
(v) In the event that, prior to the expiration of such options
or rights or the termination of such right to convert or exchange, the
consideration payable on the issuance, sale or delivery of the shares of Common
Stock shall increase, or the number of shares of Common Stock deliverable upon
conversion of or in exchange for any such convertible or exchangeable security
shall decrease, the conversion price shall forthwith be readjusted to such
conversion price as would have obtained had the adjustment made upon the
issuance of such options, rights or convertible or exchangeable securities been
made (except with respect to options or rights exercised or securities converted
or exchanged prior to such readjustment) upon the basis of such increased
consideration payable or decreased number of shares deliverable.
(vi) Options or rights issued or granted pro rata to
stockholders without consideration and securities convertible into, exchangeable
for, or carrying rights of purchase of, shares of Common Stock, which securities
are issuable by way of dividend or other distribution to stockholders, shall be
deemed to have been issued or granted at the close of business on the date fixed
for the determination of stockholders entitled thereto and shall be deemed to
have been issued without consideration.
(cc) Any shares of Common Stock or other securities held in
the treasury of the Corporation shall be deemed issued and the sale or other
disposition thereof shall not be deemed an issuance or sale thereof.
(5) The conversion price shall not be adjusted by reason of
the issuance of shares pursuant to options or stock purchase agreements granted
to, or entered into with, officers and employees of the Corporation or of any
subsidiary, provided that such shares shall not exceed 300,000 shares of Common
Stock, and provided further that such number of 300,000 shares shall be
increased or decreased proportionately in the event of the subdivision or
combination of the outstanding shares of Common Stock of the Corporation into a
greater or smaller number of shares (by way of reclassification or split up of
shares or in any other manner) or the declaration of stock dividends on the
Common Stock of the Corporation.
(6) No adjustment in the conversion prices resulting from the
application of the foregoing provisions is to be given effect unless, by making
such adjustment, the conversion price in effect immediately prior to such
adjustment would be changed by ten (10) cents or more, but any adjustment which
would change the conversion price by less than ten (10) cents is to be carried
forward and given effect in making future adjustments; provided that in making
future adjustments under clause (4) of this paragraph (e) adjustments which are
already given effect in subparagraph (i) of clause (4) shall not otherwise be
carried forward. All calculations under this paragraph (e) shall be made to the
nearest one-thousandth (1/1,000th) of one cent or to the nearest one-hundred
thousandth (1/100,000th) of a share, as the case may be.
(f) Whenever the number of shares of Common Stock deliverable
upon the conversion of the shares of 8% Convertible Preferred Stock shall be
adjusted pursuant to the provisions hereof, the Corporation shall forthwith file
at its principal office and with the transfer agent or agents for the 8%
Convertible Preferred Stock and for such Common Stock a statement, signed by the
President or one of the Vice-Presidents of the Corporation and by its Treasurer
or one of its Assistant Treasurers stating the adjusted number of shares of
Common Stock deliverable per share of 8% Convertible Preferred Stock and setting
forth in reasonable detail the method of calculation and the facts requiring
such adjustment and upon which such calculation is based. Each adjustment shall
remain in effect until a subsequent adjustment hereunder is required.
The Corporation shall at all times reserve and keep available
out of its authorized but unissued Common Stock, the full number of shares of
Common Stock deliverable upon the conversion of all outstanding shares of 8%
Convertible Preferred Stock and all other outstanding shares and other
securities which are convertible into Common Stock, and upon exercise of any
outstanding rights or options to purchase Common Stock.
(g) In connection with the conversion of shares of 8%
Convertible Preferred Stock into Common Stock, no fractions of shares of 8%
Convertible Preferred Stock or of Common Stock shall be issued; and, in lieu
thereof, non-dividend bearing non-voting scrip (exchangeable when combined for
full shares) may be issued, or the Board of Directors may make such provisions
for the stockholders in lieu of the issue of scrip as it may determine,
including payment in cash or sale of stock to the extent of any fractions of
shares and distribution of the net proceeds or otherwise. The Board of Directors
may determine and fix the form of such scrip, whether bearer or otherwise, the
denomination thereof, the expiration dates thereof, any provisions permitting
sale of the full shares for which such scrip is exchangeable for the account of
the holder of such scrip (or in lieu of sale of such full shares, provisions for
the determination of the value thereof and for payment of the value so
determined to the holders of such scrip), and any other terms or provisions of
such scrip as it may deem advisable.
(h) Shares of 8% Convertible Preferred Stock that have
been converted shall not be reissued.
(i) While any of the 8% Convertible Preferred Stock is
outstanding the Corporation shall not alter or change the preferences, special
rights or powers of the 8% Convertible Preferred Stock so as to adversely affect
the 8% Convertible Preferred Stock without the affirmative consent (given in
writing or at a meeting duly called for that purpose) of the holders of at least
two-thirds (2/3rds) of the aggregate number of shares of 8% Convertible
Preferred Stock then outstanding.
(j)(i) The Corporation, at the option of its Board of
Directors and in a manner set forth in this paragraph (j), may at any time after
July 1, 1996, redeem the Preferred Stock at a price of $4.50 per share (plus all
accrued and unpaid dividends), in whole or in part from any source of funds
legally available therefor.
(ii) In the event of a redemption of only part of the then
outstanding Preferred Stock, the Corporation shall effect such redemption pro
rata according to the number of shares held by each holder of such shares.
(iii) At least 30 days and not more than 60 days prior to the
date fixed for any redemption of the Preferred Stock (the "Redemption Date"),
written notice (the "Redemption Notice"; the Preferred Stock referenced in such
Redemption Notice shall be referred to herein as the "Redeemed Stock") shall
be mailed, postage prepaid, to each holder of record of the Redeemed Stock
at his or her post office address last shown on the records of the Corporation.
The Redemption Notice shall state:
(1) Whether all or less than all the outstanding Preferred Stock being
redeemed are to be redeemed and the total number of shares being redeemed;
(2) The number of shares of Redeemed Stock held by the holder which the
Corporation intends to Redeem;
(3) The Redemption Date, and
(4) That the holder is to surrender to the Corporation, in a manner and at
a place designated, the certificate or certificates representing the Redeemed
Stock to be redeemed.
(iv) On or before the Redemption Date, each holder of Redeemed Stock shall
surrender the certificate or certificates representing such shares to the
Corporation, in the manner and at the place designated in the Redemption Notice
and thereupon the sum of $4.50 per share of Redeemed Stock (plus accrued but
unpaid dividends) shall be payable to the order of the person whose name appears
on such certificate or certificates as the owner thereof, and each surrendered
certificate shall be cancelled and retired. In the event less than all of the
shares represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares.
(k) While any of the 8% Convertible Preferred Stock is outstanding, the
Corporation will not, without the affirmative consent (given in writing or at a
meeting duly called for that purpose) of the holders of at least two-thirds
(2/3rds) of the aggregate number of shares of 8% Convertible Preferred Stock
then outstanding, consolidate or merge with or into another corporation (whether
or not the Corporation is the surviving corporation), or sell all or
substantially all of its assets to another corporation, unless in connection
therewith lawful and adequate provision is made whereby the holders of 8%
Convertible Preferred Stock shall receive the right to convert during the
Conversion Period into the kind and amount of shares of stock and other
securities to be received by holders of the number of shares of Common Stock of
the Corporation into which the 8% Convertible Preferred Stock might have been
converted immediately prior to such consolidation, merger or sale, which right
shall be subject to adjustment, as nearly equivalent as may be practicable to
the adjustments provided for in paragraphs (a)-(k).
IN WITNESS WHEREOF, Celcor Inc. has caused this Certificate of
Designations, Preferences and Rights of Series C 8% convertible Preferred Stock,
to be duly executed by an officer thereunto authorized, and its corporate seal
to be affixed hereto and attested, this _____th day of ___________, 199__:
CELCOR INC.
By_______________________________
Dr. Nanshan Wu, President
(Corporate Seal)
Attest:
By _________________________
Michael, Hsu, Secretary
<PAGE>
CELCOR INC.
NOTICE OF ELECTION TO CONVERT SERIES C 8% CONVERTIBLE
PREFERRED STOCK
(To be signed only upon exercise of conversion rights)
TO CELCOR INC.
The undersigned, the holder of ________________ shares of Celcor Inc.,
Series C 8% Convertible Preferred Stock ("Preferred C Stock") (certificates
enclosed herewith), hereby irrevocably elects to exercise the right to convert
such Preferred C Stock at the current conversion price in effect for the
Preferred C Stock into shares of Common Stock of Celcor Inc., and requests that
the certificates for such shares be issued in the name(s) of, and delivered to,
____________________, whose address(es) is (are)
__________________________
Print name(s) to appear on
Common Stock Certificates
Date:
Check here if shares are to be issued
otherwise than to the registered holder: ______
________________________________
(Signature must conform in all
respects to the name of the
Holders as specified in every
Fill in for registration of shares of particular without alteration
Common Stock if to be issued otherwise or enlargement on the face of
than to the registered holder: this Certificate
______________________________________ _______________________________
(Name) (Name)
______________________________________ _______________________________
(Address) (Address)
______________________________________ _______________________________
______________________________________ _______________________________
(Social Security or other Taxpayer (Social Security or other
ID Number) Taxpayer ID Number)
Exhibit 10.2
Joint Venture Contract
Article I
General Principle
Under the relevant laws and regulations of PR China and United States and
adhering to the principle of equality and mutual benefits and through friendly
consultations, China Northeast Pharmaceutical Company and US Lyncroft company
jointly agree to establish a Joint Venture Enterprise in New York, United States
of America and hereby sign this contract.
Article 2
Parties of the Joint Venture
China Northeast Pharmaceutics Company (hereinafter referred to a s Chinese
Company), is registered in Shenyang, China. Its statutory address is No 37,
Zhong Gong Bei Jie, Tie Xi District, Shenyang, Liao Ning Province, P.R. China.
Its statutory representative is Mr. Shi Hong Yuan, General Directot, a citizen
of PRC.
US LYNCROFT Company (hereinafter referred to as US Company) is registered in New
York, USA. Its statutory address is 135-18 Northern Blvd. 27 Flushing, NY 11354.
Its statutory representative is Jennifer Lo, a citizen of the United States of
America.
Article 3
Establishment of the Joint Venture Company
3.1 Both parties agree to establish a joint venture company in China
conducting business in pharmaceutical manufacturing and sales
3.2 The legal name of the Joint Venture shall be: (chinese characters)
English name shall be "Northeast (USA) Corporation."
3.3 The legal address of the Joint Venture Company (tentative) shall be:
505 Northern Blvd. Room 168 Great Neck, New York 11022.
3.4 The organizational form of the Joint Venture Company is a limited
liability company. The President of the company shall be responsible
for the operations of the company.
Article 4
Business Scope of the Joint Venture Company
4.1 To engage in China-US-Japan-Taiwan quadripartiteinternational import
and export trade.
A. With pharmaceutical as the main product, engage in multiple product
trading continually expand market in US-China and other countries and
regions.
B. With the joint venture products as core products, organize product
supplies according to market demand and sell in the local market
for each party as well as the international market.
C. The joint venture company can purchase raw materials, materials
and equipment in its local country market or region.
4.2 Reinvesting in various China and US companies. A. Purchase of invest
in US's GMP factories, or invest in US to establish GMP factories to
manufacturing high tech medicine preparation and to expand sales of
Chinese pharmaceuticals in US.
<PAGE>
B. Invest in US to build trade centers with both office and residential
functions, in addition to provide office and accommodations for the two
parties, can also offer it to other Chinese companies for representative
offices.
C. Establish a medicine preparation factory in China Northeast
Pharmaceutical Company, introduce new medicine preparation technology
and expand in the China market.
4.3 Try to obtain exclusive sales agent rights for pharmaceuticals
manufactured in Taiwan or other foreign countries.
Article 5
Equity Share and Registered Capital
5.1 The joint venture company is a limited share company. Currently the
number of shares is tentatively set to be 200, after the four third of
the share holders agree to it, the total number of shares may increase.
5.2 The registered capital for the joint venture company is one and half
million US dollars. After more than half of the directors on the board
of directors agree, the total amount increase.
5.3 Total investment at the start up of the joint venture will be
determined by both parties at the signing of this agreement. Each party
will contribute 50% of the total investment and deposit in the company
account in US within 30 days of the signing of this agreement.
5.4 The joint venture company is formally established after the investment
funds ave been confined.
Article 6
Organization Structure of the Company
6.1 The joint venture company is a limited share company, the Board of
Directors shall be the highest authority of the Joint Venture Company and
shall decide all matters of importance to the Joint Venture Company.
President of the company shall be responsible for carrying out the
company policies.
6.2 The joint venture company plans to set up a subsidiary company in China
in addition to the main company in the USA. It also plans to set up
agent companies in Hong Kong and Japan.
Article 7
Share Holders Meeting
7.1 The Share Holders Meeting shall be the highest authority of the Joint
Venture Company and will hold annual meetings each year in the
headquarters office of the company. The date of the meeting will be
decided in the first Share Holders Meeting.
7.2 With the approval or request from more than half of the Board members of
Share Holders, and the conformation of the Secretary General of the
Board of Directors, the General Manager can call for special Share
Holders meeting.
7.3 The Share Holders Meeting shall abide by the US laws and regulations
and keep detailed minutes of the Share Holders Meeting and keep a file
of all relevant documents. The Secretary General of the Board of
Directors shall keep these files.
7.4 In the notification of the Share Holders Meetings, there should be clear
indications of the objective, address and time of the meeting. It should
be delivered to the Share Holders or their proxy 30 days prior to the
meeting via postal or messenger service.
7.5 With proper signed document and approval of the Secretary General, any
Share Holder can authorize proxy to be his/her representative or
announce temporary waivers of his/her rights. The other Share Holders
are considered in agreement to the above behavior unless they raised
their disagreement prior to the meeting.
7.6 There should be attendance from more than half of the Share Holders for
the Share Holders Meeting to be legally effective. If the attendance is
lower, the Chairman has the right to cancel the meeting.
7.7 When voting for a decision in the Share Holders Meeting, each share is
entitled to one vote, the share holder is entitled to the same number of
votes as his registered number of shares. Unless otherwise stated, a
decision is passed when there are more than half of the attending votes.
7.8 The addition of new share holders shall be approved by both parties and
passed by the Share Holders meeting.
Article 8
Board of Directors
8.1 The Board of Directors is the highest authority of the Joint Venture
Company. The Board Members should be older than 18. Both share holders
or non share holders can be Board Members.
8.2 Board Members are elected through the Share Holders Meeting after
proposal from share holders. The term for Board member is two years.
Board Members can continue his/her term if reelected. Board Members can
resign voluntarily or be terminated after decisions by the Share Holders
meeting. If due to the above reason, the board members are under the
requirement, the Share Holders Meeting can elect new members.
8.3 The Board of Directors is tentatively composed of five Board Members.
The Chinese Company shall appoint two while the US Company shall appoint
three. If there is a need to increase the number of Board Members, it
should be voted by the Share Holders Meetmg and receives more than three
fourths of votes.
8.4 The Board of Directors will have a Chairman and a Vice Chairman. When the
Chairman can not carry out his obligations for whatever reason, he can
authorize the Vice Chairman or another director to act on his behalf
after confirmation by the Board of Directors meeting. Chairman and the
Vice Chairman shall be elected by the Board meeting. The Chairman shall
be appointed by the US Company while the Vice Chairman shall be appointed
by the Chinese Company.
8.5 The Board of Directors should have at least two meetings in the Company
location or other pre determined location. If more that half of the
Board Members agree to request and confirmed by the Secretary General,
the Chairman should call for a special Board of Directors Meeting.
8.6 The notifications for the Board Meetings should be delivered 30 days
prior via postal service or messenger service. The notification should
clearly indicate the time, address, objective and the host.
8.7 The Board meetings need to have the attendance from more than half of
the Board members to be legally effective. If the attendance is less
than the legal number, the Chairman has the right to cancel the meeting.
8.8 When voting for issues of importance in the Board meetings, each Board
member (except the Chairman) has only one vote. The Chairman has the
right to veto when making decisions. The Chairman has no vote and the
veto power can only be used when there are equal votes on both sides and
the effort of coordination has been unsuccessful.
8.9 The Board Members are not salaried, but with the approval from the Share
Holders Meeting and allowed by the Company finances, each Board member
can be symbolically compensated for his/her travel expenses.
Article 9
Management of the Company
9.1 The Joint Venture Company has a President Responsibility System. The
President shall be the center of management of the company, responsible
for managing personnel and organizations, daily operations and planning.
9.2 The President shall be recruited by the Board Meeting after agreement
from both parties. If the President fails to perform or engaged in
unlawful behavior, he/she can be terminated by the Board Meeting.
9.3 The President shall propose business plan, human resources plan and
annual projections for the year in the first Board meeting in the fiscal
year. After the approval from Board of Directors meeting, it can be
carried out.
9.4 The Joint Venture Company has a Secretary and a Treasurer. Recruited
after recommendations from the General Manager and decisions by the
Board meeting. The Board of Directors can terminate their position at
its discretion.
9.5 The responsibilities for the Secretary and the Treasurer shall be
decided by the Board of Directors and will abide by the Company Laws of
the United States.
Article 10
Finances
10.1 The fiscal year for the Joint Venture Company starts on April 1 in the
first year and ends on March 1 in the second year.
10.2 All financial system and schedules of the Joint Venture company shall be
abiding by the regulations of the United States, and all taxes and fees
shall be paid in accordance with the regulations.
10.3 The treasurer should provide financial schedules audited by qualified
accountant within three months of the fiscal year ending date. These
schedules shall be reported in the Share Holders Meeting. The Treasurer
should report the current financial situations in each Board of
Directors Meeting.
10.4 The US Company and the Chinese Company has the right to hire their own
accountant to audit their financial schedules. T'he Company can not have
any disagreements. Each party is responsible for its own expenses.
Article 11
Obligations of Each Party
US Company
11.1 Apply to relevant organization to seek approval of the registration and
obtain business license. Prepare necessary office equipment needed for
the start up of the office.
11.2 Assist Chinese Company employees in obtaining visa documents and help
arrange accommodations and travel itinerary.
11.3 Recruit management and professional staff. Assist the Joint Venture
company set up a sales network in the US and provide assistance in
knowledge, technology and market expansion related to setting up a
pharmaceutical factory in China.
11.4 Assist the Joint Venture Company in obtaining exclusive sales agent and
manufacturing agent rights in China for foreign pharmaceutical products.
China Company
11.5 Provide information on the latest development and opportunities as they
related to the business of the joint venture company.
11.6 Assist the joint venture company in the selection of qualified employee
from the Chinese company, make travel and accommodations arrangements
for the joint venture employee in China.
11.7 Obtain preferred sales agent authorization of Chinese pharmaceutical
products and raw materials. Provide long term supply of pharmaceutical
products and raw materials that meet international standard according to
the contract.
11.8 Carry out other business activities in China assigned by the joint
venture company.
Article 12
Agreement
12.1 The articles listed in the contract including the attachment documents
are all integral parts of this contract.
12.2 Upon the approval of this contract and its attachments from the upper
management of both parties, this contract will become effective
immediately after the signing of this contract
12.3 The two parties, except notifications sent out via fax or telex, should
communicate in writing on issues regarding the rights and
responsibilities of each party. If there are any changes to the
statutory address listed in article 2, the party with address change
should notify the other party few days ahead of time.
12.4 The duration of the Joint Venture Company shall be 15 years. The date of
the signing of the contract shall be the establishment date of the
company. Extension of the duration can be granted with mutual agreement
and approval from the Share Holders Meeting.
12.5 Should either of the parties to the contract be prevented from executing
the contract by force majeure, such as earthquake, typhoon, flood, fire
and war and other unforeseen events, and their happening and
consequences are unpreventable and unavoidable, the prevented party
shall notify the other party in writing and without delay, and provide
the detailed information of the events and a valid document for evidence
by the relevant public notary organization for explaining the reason of
its inability to execute or delay the execution of all or part of the
contract. Both parties shall through consultations, decide whether to
terminate the contract or to exempt the part of obligations for
implementation of the contract or whether to delay the execution of the
contract according to the effects of the events on the performance of
the contract.
12.6 Should the Joint Venture Company be unable to continue its operations or
incur continuous financial loses, with the agreement from both parties
and the approval of the Share Holders Meeting, the Joint Venture Company
contract can be terminated prior to the original term or one party
withdraw from the Joint Venture Company and return its shares to the
Company, the other party shall take over the operation of the Joint
Venture Company and be responsible for the gains and losses of the
company.
12.7 Upon the fulfillment of the contract term or early termination of the
contract, it shall audit its assets and distribute these assets to share
holders according to the proportion of shares.
12.8 When amendment is made to this contract and its appendices, it shall not
be valid unless a written agreement is signed by both parties.
Article 13
Liabilities for Breach of Contract
13.1 If either party fails to pay on schedule the contributions stipulated in
Article 5 of this contract, the party breaching the contract shall pay
the party observing the contract 1% of the total investment overdue each
day counting from the 30th bank date overdue. Should the party breaching
the contract fail to contribute the amount of capital it committed for
90 days, in addition to claim the accumulated fines paid by the party
breaching the contract, the party observing the contract shall have the
right to terminate the contract or seek news partners to replace the
party breaching the contract. The amount of fines should not be less
than the total committed investment from the breaching party.
13.2 Should all or part of the contract and its appendices be unable to be
fulfilled owing to the fault of one party, the breaching party shall
bear the responsibilities thus caused and compensate the other party for
the losses. Should it be the fault of both parties, they shall bear
their respective responsibilities according to the actual situation.
Article 14
Arbitration
14. The Parties shall exert their diligent best efforts to resolve all
disagreements by amicable discussion. In the event they cannot agree, the
matter shall be submitted to the Arbitration Commission of the country of
Joint Venture Company is registered in. The arbitrational award is final
and binding upon both parties.
14.2 During the process of arbitration, the contract should be executed with
no interruption, except for those parts relating to discrepancies under
arbitration.
Article 15
Laws Applicable
15.1 The formation of this Joint Venture Company Contract, its validity,
interpretation, execution shall be governed by the laws of the United
States of America.
15.2 The issues not addressed in this contract shall be executed in
accordance with the Company Laws of the United States of America.
Article 16
Language
16.1 This contract and the appendices will be written in Chinese and English,
both the Chinese and the English version has the same statutory effect.
16.2 Subtitles for each article are for clarity and do not effect the
interpretation of the content of the contract.
Authorized representative of the Authorized representative of the
Chinese Company US Company
China Northeast Pharmaceutical Lyncroft Corporation
Company President
President Luo Yi Hui
Shi Hong Yuan
Signature Signature
Date Date
<PAGE>
Exhibit 10.3
Contract of Shenyang United Vitatech
Pharmaceutical, LTD.
Chapter 1
General
Based on the "Law of Sino-Foreign Joint Venture of the People's Republic of
China" and other Chinese legal stipulations concerned and on the principle of
equality and mutual benefit, through friendly negotiating, China Northeast
Pharmaceutical Factory and American Northeast Corp. both agree to invest and
establish the joint venture in Shenyang City, Liao Ning Province of the People's
Republic of China and make this contract.
Chapter 2
Each party of the Joint Venture
1. The parties of this contract are: China Northeast Pharmaceutical
(called the first party in the following). Registered Shenyang City,
China. Its legal address is:
37 Zhong gong Bei Street
Tiexi District
Shenyang City, Liao Ning Province
China
Legal Representative: Hong Yuan Shi
Title: President
Nationality: Chinese
American Northeast Corp. (called the second party in the following).
Registered in New York State, USA. Its legal address is:
505 Northern Blvd. Suite 168
Great Neck, New York 11021
Legal Representative: Yi Hui Lo
Title: President
Nationality: American
Chapter 3
Establishing the Joint Venture
2. Both the first and second parties agree to establish the Joint Venture
Shenyang United Vitatech Pharmaceutical LTD (called the Joint Venture in
the following) in China based on "The Law of Sino-Foreign Joint Venture
of the People's Republic of China" and other Chinese legal stipulations.
3. The Joint Venture named Shenyang United Vitatech Pharmaceutical, LTD.
The legal address of the Joint Venture is:
Kun Ming Hu Street
Yu Hong District
Shenyang City, Liao Ning Province
PRC
4. All the activities of the Joint Venture must obey Chinese law, orders
and stipulations.
5. The Joint Venture is a limited company. Each party's investment will be
responsible for the Joint Venture's debts. Each party will share
profits, risks and losses on the proportion of its invested amount in
registered capital.
Chapter 4
Objective, Business Scope and
Production Scale
6. The Joint Venture's objective is to enhance economic cooperation and
technology exchange based on the principle of mutual benefit. Using
advanced and practical, scientific and technological management methods
to improve product quality, develop new advanced scientific and
technological products, make the quality, price and the like have more
competitive abilities on the international market, improve economic
efficiency, boost exports and make both parties gain satisfactory
economic benefits.
7. The Joint Venture's business scope is:
1. chemical intermedia
2. raw chemical materials
3. pharmaceutical products
4. nutritional supplements
5. cosmetic products
8. The Joint Venture's production scale is an annual production of 600
million pieces, 200 million of which are vitamin pills, prenatal
vitamins 100 million pieces, children's vitamins 100 million pieces,
adult multi-vitamins 100 million pieces, senior vitamins 100 million
pieces, multivitamin stress capsules 50 million pieces, cosmetics (soft
capsule type) 12 million pieces. With the development of the products,
drop medicine, orally taken liquid mediciine, medicinal preparation,
soft medicinal preparations, powder injections, raw chemical materials
and nutritional supplements will be developed in the medicine
productions.
Chapter 5
Total Investment Amount
and Registered Capital
9. Total investment of the Joint Venture is 10 million dollars.
10. Both parties' total investment is 5.75 million dollars as the Joint
Venture's registered capital. The difference between the total
investment amount and registered capital will be a loan given from the
bank to the Joint Venture. The first party: $2,500,300.00 will be
43.4834782% of the loan. The second party: $3,249,700.00 will be
56.516217% of the loan.
11. Both Parties will invest with the following contents:
The first party: cash $750,000.00
Land: 84,000 square meters valued at $1,750,300.00
The second party: cash $2,100,000.00
Special medicine technology: $1,149,700.00.
12. The first party will finish payment before the end of 1994. The second
party's payment schedule is $1,000,000.00 before the end of July
1994, $600,000.00 before the end of June of 1995; $500,000.00 before
the end of December 1995. The second party's special medicine
technology will be presented in two periods: the technical information
cost of $350,000, will be handed in and verified and approved by the
first party before the end of September 1994, the remaining technical
information worth $799,700.00 will be handed in and verified and
approved by the first party before the end of 1995. The value of the
special technology shall be confirmed with the standard verified
and evaluated by Shenyang Legal Department. If the evaluated price
does not reach the expected price (Dollar amount), the second party
will increase the capital amount or increase the investment proportion.
13. If either party wants to transfer its total or partial investment amount
to a third party, it must have consent from the other party and approved
by the original approval organizations. When one party wants to transfer
its investment amount totally or partially, the other party has the
privilege to buy it.
Chapter 6
Responsibilities of Both Parties
14. Both the first and second parties should be responsible for fulfilling
the following responsibilities respectively:
Transact some approvals from competent Departments concerned for
establishing the Joint Venture, enter registration, transact its business
certificate and so on.
Provide its investments based on the stipulation of #11, organize the
designs and construction of the Joint Venture's building and engineering
equipment.
Provide the Joint Venture with raw chemical production technology and
craft.
Assist in the transaction of customs procedures and transportation for
the imported equipment which the Joint Venture needs in China.
Assist the Joint Venture in buying or leasing raw chemicals, office
equipment, transportation, communication systems etc. in China.
Assist the 0Joint Venture in supplying the basic equipment, water,
electricity, gas and transportation facilities, etc.
Assist the Joint Venture to employ local Chinese business management
personnel, technical personnel, workers and other necessary personnel.
Assist foreign personnel to apply for visas, work permits and travel
documents.
Responsible for transacting the Joint Venture sales of some of the
products and other consigned matters.
The second party's responsibilities:
Provide the investment based on the stipulation in #11. Responsible for
production management of the Joint Venture. Transact some matters
consigned by the Joint Venture concerning buying mechanical equipment,
material, etc. in China.
Train Joint Venture's technical personnel and
workers.
Responsible for the designs and construction of the Joint Venture's
GMT standard building and equipment.
Provide the Joint Venture with sophisticated medical technology.
Responsible for other matters consigned by the Joint Venture.
Chapter 7
Sales of Products
15. The Joint Venture's products will be sold in China and abroad.
16. The Joint Venture's products may be sold or sold on commission by China
materials Departments and Business Departments or may be sold directly
by the Joint Venture.
17. The Joint Venture's products may be sold directly by the Joint Venture
abroad or may be consigned to be sold by Foreign Trade companies.
Chapter 8
Board of Directors
18. The Joint Venture has a Board of Directors. The date when the Joint
Venture is registered is the establishing date of the Board of Directors.
19. The Board of Directors consists of seven Directors: the first party has
three, the second party has four. The Chairman will be elected from the
second party, the Vice-Chairman will be elected from the first party.
The directors and Chairman will be elected for three years as one term
and can be re-elected. Each party will elect its directors and the
Chairman in writing.
20. The Board of Directors has the highest authority and decides all
important matters in the Joint Venture. The amendment of the Joint
Venture's regulations, termination of the Joint Venture, increasing or
transferring of the Joint Venture's registered capitals, combination of
the Joint Venture and other economic organization and so on. Matters of
importance must be decided by a general meeting of the Board of
Directors. Other matters may be passed by over two-thirds of the votes
or circulated with fax and passed with over two-thirds of the
directors' signatures.
21. The Chairman is the legal representative of the Joint venture. If
the Chairman cannot assume his authority for some reason, the Vice-
Chairman or other director can be assigned as a representative.
22. The Board of Directors must have a meeting at least once a year. The
meeting will be called and presided over by the Chairman. With over one
third of the directors' motions, the Chairman may call for an emergency
meeting. All meeting records must be filed.
Chapter 9
Business Management Organization
23. The Joint Venture will set up a business management organization which
is responsible for the company's daily business management. The Board of
Directors will employ one General Manager, three deputy managers. The
General Manager and deputy managers will be recommended by both the
first and second parties.
24. The General Manager will be responsible for the Board of Directors and
execute every decision of the Board of Directors, organize and head the
daily business management of the Joint Venture. Each section manager
employed in the business management organization will be responsible for
the General Manager.
25. If the General Manager exploits his or her office or carries out
fraudulent practices, he or she will be dismissed at any tlme after the
Board of Directors makes the decision.
Chapter 10
Equipment Buying
26. The Joint Venture's raw chemicals, fuel, accessories, vehicles,
tools, office equipment, etc. are considered to be bought in China
first with the equal qualities and conditions.
27. When the Joint Venture consigns the second party to buy some equipment
abroad, the first party may participate.
Chapter 11
Labor Management
28. The Joint Venture worker's employment, dismissal, resignation, wages,
welfare, labor insurance and bonuses will be planned by the Board of
Directors, stipulate the Joint Venture and its workers' union with group
or individual labor contracts based on "The Stipulation of Sino-Foreign
Joint Venture Labor Management of the People's Republic of China". After
the labor contract is signed, it will be filed in the local labor
management department.
29. Employment, wages, securities, welfare and business traveling standard
of senior management personnel recommended by both the first and second
parties will be decided by the Board of Directors.
Chapter 12
Taxation, Finance, Auditing
30. The Joint Venture will pay taxes based on Chinese law and stipulations
concerned.
31. The Joint Venture's workers will pay their income taxes based on "The
Laws of Individual income tax of the People's Republic of China".
32. The Joint Venture will draw reserve fund, company development fund,
worker's welfare and reward fund based on the stipulations of "The
Sino-Foreign Joint Venture of the People's Republic of China." Annual
drawing proportion will be discussed and decided by the Board of
Directors based on the company's business situation.
33. The Joint Venture's fiscal year is from January I to December 31 every
year. All of the accounting vouchers, bill report forms and accounting
books will be in Chinese (characters).
34. The Joint Venture's finance auditing will be checked and verified by
the auditor registered in China. Its results will be reported to the
Board of Directors and the General Manager. If the second party
considers it necessary to invite another country's auditor to check
and verify the annual finance, the first party will be in agreement.
However, the entire cost will be paid by the second party.
35. The first two months of every business year, the General Manager will
draw up an asset and debt table, benefit and loss calculation book and
profit distribution plan for the previous year and submit them to the
Board of Directors to be checked, verified and passed. The General
Manager will submit a quarterly asset and debt table and benefit and
loss calculation book within two months after every quarter.
Chapter 13
The Joint Venture's Deadline
36. The Joint Venture's deadline is 30 years. The establishing date of the
Joint Venture is the issue date of the Joint Venture's business
certificate. If one party suggests and all passed in the meeting of
Board of Director's, may apply for the extension of the Joint Venture's
deadline to Shenyang Developing Zone Management Committee before six
months of the Joint Venture's deadline.
Chapter 14
Property Transaction When the Joint Venture Expires
37. When the Joint Venture has expired or is terminated ahead of time, the
Joint Venture wiill liquidate based on the laws concerned. After
liquidating, the property will be distributed on the proportion of
investment by both the first and second party.
Chapter 15
Insurance
38. All of the Joint Venture's insurance will be covered by the Insurance
Company of the People's Republic of China, Shenyang Branch. Insurance
coverage, insurance value and insurance duration will be discussed and
decided by the Board of Director's based on the insurance company's
stipulations.
Chapter 16
Amendment, change and denouncement of contract
39. The amendment of the contract and its annexes will be valid after both
parties sign the written agreement and are approved by the original
approval organization.
40. If a natural disaster should occur or if the contract could not be
resumed or if the Joint Venture lost year after year and was unable to
continue, the contract may be terminated and renounced ahead of time
after it is passed by the Board of Directors and approved by the
original approval organization.
41. If one party did not fulfill the contract and responsibilities stipulated
in regulations or violated the contract and regulations, making the Joint
Venture unable to manage or reach the business goals stipulated in the
contract, the other party is authorized to claim damage and terminate the
contract after approval by the original approval organization based on
the stipulations of the contract. If both the first and second parties
agree to continue business, the compensation of the Joint Venture's
economic loss will be made by the party who violated the contract.
Chapter 17
Responsibilities of Violations
42. If either party did not finish payment of its investment amount within a
specific period based on the stipulations of the contract chapter 5
calculate from the first month of being overdue for every overdue month.
The party who violated the contract would pay 3% of expected payment in
that period as a compensation of being overdue to the other party who
keeps the contract. After three months of being overdue, the party who
violated the contract would pay 9% of accumulated expected payment as a
compensation of being overdue, the other party who kept the contract
would be authorized to terminate the contract based on #46 stipulation
of the contract and claim damage to the party who violated the contract.
43. If one party should make a mistake what would cause the contract or its
annexes not to be carried out, the party who made the mistake would
assume the responsibilities of violation. If both parties made mistakes,
both parties would assume their own responsibilities of violation
respectively based on the facts.
Chapter 18
Natural Disasters
44. If natural disasters such as earthquakes, typhoons, floods, fire, war
etc. directly influenced the contract's lack of fulfillment, the party
who encountered it would inform the other party as soon as possible and
provide accident details and valid evidence which would state the
reasons why the contract could not be fulfilled or partially fulfilled
or why the contract needed to be delayed to be fulfilled. This evidence
must be issued by local officials where the accident occurred. Based on
the accident influence degree of the contract's fulfillment, both
parties would negotiated and decide whether to renounce the contract or
partially relieve the responsibilities of the contract's fulfillment or
delay the contract's fulfillment.
Chapter 19
Adaptive Law
45. The settlement of the contract's conclusion, violation, explanation,
fulfillment and dispute shall be the subject to "The Law of the People's
Republic of China."
Chapter 20
Settlement of Dispute
46. All disputes in connection with this contract or the execution thereof
shall be settled friendly through negotiations by both parties. Where no
settlement can be reached, the disputes shall be submitted to Beijing
Arbitration Committee of the China Council for the Promotion of
International Trade for arbitration in accordance with the Provisional
Rules of Procedures promulgated by the said Arbitration Committee. The
decision of the Arbitration Committee shall be accepted as final and
binding by both parties. Arbitration expenses shall be borne by the
losing party.
Chapter 21
Written Language
48. This contract will be written in Chinese characters. Two copies of this
contract's English version will be finished within six months after this
contract is signed. They will be signed by both parties and filed.
Chapter 22
Violation of Contract and Others
49. This contract and its annexes must be approved by Shenyang Developing
Zone Management Committee and will be valid by the date when they are
approved.
50. The information related to each party's rights and responsibilities must
be notified in writing except telegram and telex. Both the first and
second party's legal addresses listed in this contract are mailing
addresses of both parties.
51. Based on the regulations of this contract, the following attached
agreements are made including the Joint Venture's regulations,
engineering agreement, sales agreement, etc.
52. This contract will be signed by authorized representatives of both the
first and second parties on May 16, 1994 in Shenyang, China.
The first party: China Northeast The Second Party: American Northeast Corp,
Pharmaceutical Factory
Representative: Hong Yuan Shi Representative: Yi Hui Lo
May 26, 1994 May 20, 1994
<PAGE>
Exhibit 10.4
REGULATIONS OF SHENYANG UNITED VITATECH PHARMACEUTICAL LTD.
CHAPTER I GENERAL
No. 1
Based on the Law of "Sino-Foreign Joint Venture" of the People's
Republic of China, China Northeast Pharmaceutical Factory (called first
party, in short in the following) and American Northeast Corp. (called
second party, in short in the following) signed the contract of
establishing Joint Venture Shenyang United Vitatech Pharmaceutical
Ltd., in Shenyang, China (called joint venture in short in the
following) and worked out the Joint Venture's regulations.
No. 2
Joint Venture named: SHENYANG UNITED VITATECH PHARMACEUTICAL, LTD.
The legal address of the Joint-Venture Kun Ming Hu Street
Yu Hong District
Shenyang City, Liao Ning Province
P.R.C.
No. 3
The name and legal address of the first and second party:
First Party: CHINA NORTHEAST PHARMACEUTICAL FACTORY
Legal Representative: Hong Yuan Shi
Occupation: President
Nationality: Chinese
Legal Address: 37 Zhong Gong Bei Street
Tiexi District
Shenyang, China
Second Party: NORTHEAST (USA) CORP.
Legal Representative: I-Hui Lo
Occupation: Chairperson
Nationality: American
Legal Address: 505 Northern Blvd.
Suite 168
Great Neck, NY 11021
NO. 4 -
The Joint-Venture is a Limited Company.
NO. 5 -
The Joint-Venture is legally in China, and controlled and protected by
Chinese Law. All of the activities in the Joint-Venture must obey
Chinese laws, orders, and stipulations.
CHAPTER 2. OBJECTIVE, BUSINESS SCOPE, PRODUCTION SCALE
NO. 6 -
The Objective of the Joint-Venture: Using advanced and practical
scientific and technological management methods to produce and manage
medicinal intermediates, raw chemicals, and medicinal preparation
products; develop new technology and products to reach the
international level and obtain economic benefits that satisfies both
the first and second parties.
NO. 7 -
The Business Scope of the Joint-Venture: To produce and sell medicine
intermediates, raw chemicals, medical preparations, nutritional
supplements, cosmetics, etc.
NO. 8 -
The Production Scale of the Joint-Venture: The production scale for the
Joint-Venture is 0.6 Billion pieces; 0.2 Billion Vitamin C pills; 0.l
Billion Prenatal Vitamins; 0.1 Billion Children Vitamins; 0.I Adult
Multivitamins; 0.I Billion Liquor-Resoluted Liver-Aided Vitamin
Capsules, medicine intermediate Vitamin C90, C95, 200 tons, Cosmetics
(Soft Capsule Type) 12 Million Pcs.
With the development of the products, drop medicines, oral liquid
medicine, medicinal preparations, soft medicinal preparations, powder
injections, original material medicines, and nutritional heath
protection products will be developed in the medicine productions.
NO. 9 -
The Joint-Venture will sell its products to both domestic and
international markets.
CHAPTER 3 - TOTAL INVESTMENT AMOUNT AND REGISTERED CAPITAL
NO. 10 -
Total investment amount of the Joint-Venture is US$10 Million Dollars
Registered Capital is US$5.75 Million Dollars
NO. 11 -
Investment status of both the first and second party:
First Party: Will pay cash US$750,000.00
Will pay for the property US$I,750,300.00 for
84,000 square meters
Total will be 43.48347% of the Registered Capital
Second Party: Will pay cash US$2,100,000.00
Will pay US$1,149,700.00 for Medicine Technology
Total will be 56.5165217% of the Registered Capital
NO. 12 -
The First Party will finish payment by the end of the year 1994. The
Second Party payment schedule is:
o US$1,000,000.00 will be paid by the end of the year 1994
o US$600,000.00 before the end of June 1995
o US$500,000.00 before then end of December 1995
The Special Technology of the Second Party will be presented in two
periods. The Technical information cost of US$350,000.00 will be
submitted, then verified, and approved by the first party before the
end of the year 1995. The price of the Special Technology should be
confirmed with the standard verification and evaluated by the Shenyang
Legal Department concerned. If the evaluated price cannot reach the
expected price (dollars), the Second Party will increase the capital
amount or increase the investment proportion.
NO. 13 -
After both the First and Second Parties pay the investment, the
Joint-Venture will invite the a chartered accountant registered in
China to check and verify the investments and present the Investment
Report.
The Joint-Venture will issue the Certificate of Investment to both
parties based on the Investment Report.
The main content of the Certificate of Investment is:
o The Name of the Joint-Venture
o The establishing Date
o The Name of the First or Second Party and investment amount
o Date of Investment
o Date of Issue, etc...
NO. 14 -
The Joint-Venture cannot decrease its Registered Capital Amount
NO. 15 -
Any Registered Capital investment of the Joint-Venture must be
consented to by both the First and Second Party and approved by the
original approval organizations.
NO. 16 -
If either party desires to make over their investment amount, whether
totally or partially, it must be consented to by the other party. When
one party wants to make over its investment amount, the other party has
the privilege to buy it.
NO. 17 -
After any Registered Capital increase and/or makeover of the
Joint-Venture are approved and passed by the Board of Directors, it
must be approved by Shenyang Development Zone Administration and
registered in the Industry and Commerce Administration.
CHAPTER 4 - BOARD OF DIRECTORS
NO. 18 -
The Joint-Venture has a Board of Directors. The Board of Directors is
the most powerful organization in the Joint-Venture.
NO. 19 - The Board of Directors will decide all important matters, its authority
is on the following:
o Deciding and approving important reports submitted by the
General Manager, such as Production Plans, Annual Business
Reports, funds, sales, etc.
o Approve annual financial affairs, income and expense budgets,
annual profit distribution plans, etc.
o Discuss and pass important stipulations for the Company
o Deciding to establish branches of the Company
o Amend Company Regulations
o Discuss and decide Joint-Venture stopping productions,
terminations, or combining with other economic organizations.
o Deciding the employment of a General Manager and Senior Staffs
o Making Labor Contracts
o Taking charge of the termination of the Joint-Venture when it has
expired.
o And various other important affairs
NO. 20 -
A Board of Directors consists of seven Directors, the First party
having three and the Second Party having four. The Directors will be
elected for a term of three years and can be re-elected.
NO. 21 -
A Board of Directors has one Chairperson elected from the Second Party
and one Vice- Chairperson elected from the First Party.
NO. 22 -
When either party wants to elect or change Directors, it should inform
the Board of Directors in writing.
NO. 23 -
A Board of Directors must have a meeting at least once per year. If
important incidents occur and over one-third of the Directors agree to
a meeting, and Emergency Meeting may be held,
NO. 24 -
The Meeting of the Board of Directors is held at the location of the
Joint-Venture. However, if it is necessary, the meetlng may be held at
another location if both parties agree.
NO. 25 -
The Meeting of the Board of Directors will be called and presided by
the Chairperson. If the Chairperson is absent or otherwise unavailable,
the Vice-Chairperson may call and preside over the meeting.
NO. 26. -
The Chairperson must inform each Director in writing of the Meeting
contents, date, time and location thirty days before the Meeting is
held.
NO. 27 -
If any Director cannot attend the Meeting of the Board of Directors, he
or she may appoint his or her deputy, in writing, to attend the meeting
in their place. If he or she does not attend the meeting and does not
appoint any substitute, he or she will forfeit the right to vote.
NO. 28 -
The legal number of Directors who attend the Meeting of the Board of
Directors must be two-thirds of the total number of Directors. Any
decision will be null and void if the legal number of Directors is not
met.
NO. 29 -
Every meeting of the Board of Directors must have a detailed written
record. The record must be signed by all directors who attend the
meeting. If any director cannot attend the meeting, the deputy he/she
appoints will sign the record. The record will be written in Chinese
(characters) and will be filed in the Joint-Venture.
NO. 30 -
The following items must be passed by the Board of Directors:
1. Amendment of the Joint-Venture Regulations.
2. Termination and break-up of the Joint-Venture.
3. Enlargement and Makeover of the Joint Venture's registered
Capitals.
4. Combination of the Joint Venture and other economic
organizations.
NO. 31-
When the directors from both parties attend the Meeting of the Board of
Directors, all important matters listed in No. 19 of the regulations
will come into force only when they are passed by over two-thirds of
the Board of Directors.
CHAPTER 5 BUSINESS MANAGEMENT ORGANIZATION
NO. 32 -
The Joint Venture will set up a Business Management Organization. Under
the supervision of this Organization will be Production Technology,
Financial & Human Resources, Sales and Marketing, plus other sections.
NO. 33 -
The Board of Directors will employ one (1) General Manager and (3)
Deputy Managers in the Joint Venture. The General Manager and Deputy
Managers will be recommended by both the first and second parties.
NO. 34 -
The General Manager will report to the Board of Directors directly and
execute every decision of the Board; lead and organize production,
technology and business management in the Joint Venture. The Deputy
Managers will be responsible to the General Manager.
NO. 35 -
The General Manager's term of employment will be two years. If, after
one term, the Board of Directors agree, the General Manager may be
re-employed for another term.
NO 36 -
The Chairperson, Vice-Chairperson or any of the other Directors may be
employed as the General Manager or other Senior Staff members in the
Joint Venture with the approval of the Board of Directors.
NO. 37 -
The General Manager cannot be employed as a General Manager or Deputy
Manager in any other economic organizations, and cannot participate in
any business competitions for any other economic organizations other
than the Joint Venture. There will be no exceptions to this rule
without the approval of the Board of Directors.
NO. 38 -
If the General Manager or other members of the Senior Staff desire to
resign, he/she must submit a written report to the Board of Directors
in advance. If any of the aforementioned persons exploit his/her office
or carry out fraudulent practices, he/she will be dismissed at any time
after the Board of Directors have agreed to do so. If he/she breaks any
criminal laws, he/she will be remanded.
CHAPTER 6 FINANCIAL AFFAIRS AND ACCOUNTING
NO. 39 -
The Joint Venture's financial affairs and accounting will be executed
based on "The Stipulations of Sino-Foreign Joint Venture's Financial
Affairs and Accounting Systems" stipulated by the Financial Department
of the People's Republic of China.
NO. 40 -
The Joint Venture's fiscal year is based on the International Calendar.
One Fiscal Year starts from January 1 and ends December 31.
NO. 41 -
The Joint Venture's vouchers, account books, and report forms will be
written in Chinese characters.
NO. 42 -
The Joint Venture will use RMB as the currency for the account books.
The RMB exchanges with other currencies based on the exchange rates
promulgated by the State Foreign Exchange Administration of the
People's Republic of China on that date.
NO. 43 -
The Joint Venture may open RMB and foreign exchange accounts in other
banks other than that but only if agreed to by the Shenyang Branch of
the Bank of China or the Bank of China.
NO. 44 -
The Joint Venture will use common internationally used systems to keep
accounts.
NO. 45 -
The Joint Venture's financial affairs and accounting books must record
contents as follows:
1. Amount of all cash income and payment in the Joint Venture.
2. Status of all material purchases and sales in the Joint Venture.
3. Status of registered capitals and debts in the Joint Venture.
4. Status of registered capitals' payment time, increment and
makeover in the Joint Venture.
NO. 46 -
In the first two months of the first fiscal year, the Finance Section
of the Joint Venture must make a table of assets and debt, and a loss
and benefit calculation book. After the books are checked and signed by
an auditor, they will be submitted to the Board of Directors. In
addition, a loss and benefit calculation book for each season will be
published every three months.
No. 47 -
Either party of the Joint Venture has the authority to hire their own
auditors to check the Joint Venture's account books.
No. 48 -
The Board of Directors decides the rate of depreciation of the Joint
Venture's regular assets based on the stipulations of the "Sino-Foreign
Joint Venture's Income Tax Law of the People's Republic of China".
NO. 49 -
All of the foreign exchange affairs will be transacted based on
"Temporary Regulations of Foreign Exchange Management of the People's
Republic of China" and the Joint Venture's Contract.
CHAPTER 7: PROFITS DISTRIBUTION
NO. 50 -
Based on legal stipulations, the Joint Venture will draw up a reserve
fund, a business development fund, and a worker's reward and welfare
fund from its profits minus income tax. The proportion of these funds
will be decided by the Board of Directors.
NO. 51 -
The profits minus both the income tax and these funds will be
distributed according to the proportion of registered capitals invested
by the First Party and Second Party.
NO. 52 -
The net profits will be distributed once per year. The profits
distribution plan and profit amount of each party will be promulgated in
two months after each fiscal year.
NO. 53 -
Before the previous fiscal year's loss is compensated, the Joint Venture
cannot distribute profits. The profits which are not distributed in the
previous fiscal year may be distributed in the next fiscal year. The
Board of Directors will discuss and decide the profit distribution and
adjustment.
CHAPTER 8: THE WORKERS
NO. 54 -
The Joint Venture workers' employment, dismissal, resignation, wage,
welfare, labor insurance, labor protection, and working disciplines
will be executed based on "The Sino-Foreign Joint Venture Labor
Management Stipulations of the People's Republic of China.
NO. 55 -
The employees in the Joint Venture may be recommended by Shenyang
Development Zone Labor Department, or may be recruited publicly. But
all of the candidates must first pass the Joint Venture's examinations.
NO. 56 -
The Joint Venture is authorized to punish those workers who violate the
Joint Venture's rules, regulations and working disciplines with a
warning, recording a demerit, or reducing wages. The Joint Venture may
dismiss those workers with very bad cases, and report and file these
workers to the local labor department
NO. 57 -
The workers' wages will be decided by the Board of Directors based on
the reference of some Chinese stipulations concerning workers, wages
and the Joint Venture's detail situations. These decisions will be
detailed in the Labor Contract. With the development of productions and
an improvement of the worker's abilities, the Joint Venture will raise
the worker's wages accordingly.
NO. 58 -
The Joint Venture will specify the worker's welfare, bonuses, labor
protection and labor insurance in each rule and regulation, and
guarantee workers to engage in production under the regular conditions.
CHAPTER 9: WORKER'S UNION
NO. 59 -
The Joint Venture's workers are authorized to establish a Worker's
Union Organization, and have Union activities based on the stipulation
of "The Law of Worker's Unions of the People's Republic of China".
NO. 60 -
The Joint Venture Worker's Union will be the representative of the
workers benefits. Its main purposes are to: uphold Worker's Benefits,
negotiate with the Joint Venture on items with which they are
concerned, to unite and educate the workers to improve production, and
enforce disciplines and the Labor Contract.
NO. 61 -
The Joint Venture Worker Union may guide, help, or represent the
workers in signing individual Worker's Contracts with the Joint
Venture, and supervise the enforcement of the contract.
NO. 62 -
The head representative of the Joint Venture Worker's Union is
authorized to attend some of the meeting of the Board of Directors in
which some problems may be discussed concerning worker's wages, rewards
and disciplining, labor insurance, working disciplines, etc., and
reflect worker suggestions and demands.
NO. 63 -
The Joint Venture Worker's Union will participate in reconciling
controversy between the workers and the Joint Venture.
NO. 64 -
The Joint Venture will deduct 2% of the Joint Venture's workers' wages
to be designated for the Worker's Union Fund. The Joint Venture
Worker's Union will use the Fund based on "Union Fund Management"
stipulated by the State General Worker's Union of the People's Republic
of China.
CHAPTER 10: DEADLINE, TERMINATION, & LIQUIDATION
NO. 65 -
The Joint Venture's deadline thirty (30) years from the date of issue
of the Business Certificate.
NO. 66 -
If both the First Party and the Second Party consent to extend the
Joint Venture deadline, the Board of Directors must submit a completed,
written application of extension to the Committee of Shenyang
Development Zone Administration six months before the deadline. After
approval, a change register procedure must be transacted in the
Department of Industry and Commerce.
NO. 67 -
If both the First Party and the Second Party decide that termination is
the most beneficial to both parties, the Joint Venture may be
terminated ahead of time. The Joint Venture's termination ahead of
schedule needs to be decided by the Board of Directors and approved by
the Shenyang Foreign Trade Committee.
NO. 68 -
If any one of the following cases happens, either the first or the
second party is authorized to terminate the Joint Venture legally:
1. Due to an unprotected accident, the contract cannot be
resumed by either party.
2. The Joint Venture assumes losses from year to year and has
no abilities to manage its business.
3. If either party does not discharge its responsibility of
the contract and regulations, thus making the Joint Venture
unmanageable and hence unable to reach its business goal.
This will be regarded as a one-sided termination.
4. The Joint Venture is expired.
NO. 69 -
When the Joint Venture is expired or terminated ahead of time, the
Board of Directors must set forth liquidation procedures in both
principle and personal liquidation committees, to constitute a
Liquidation Committee, and thus liquidate the Joint Venture's property.
NO. 70 -
The Liquidation Committee's tasks are to liquidate the Joint Venture's
properties creditor's rights and debts; draw up the forms for assets,
debts, and trusts of the property; make liquidation plans which will be
submitted to the Board of Directors for execution after they are
passed.
NO. 71 -
During the liquidation period, the Liquidation Committee will represent
the Joint Venture to sue or defend legally.
NO. 72 -
The cost of the liquidation and the Liquidation Committee member's
salaries will be paid from the Joint Venture's existing property.
No. 73 -
The Liquidation Committee will re-evaluate the Joint Venture's assets
with references to the prices at that time.
NO. 74 -
After payment of the Joint Venture's debts are completed, the
Liquidation Committee will distribute the remaining property to the
First and Second Parties based on the proportion of the registered
capital investment.
NO. 75 -
After the liquidation is completed, the Joint Venture must submit a
report to Shenyang Development Zone Management Committee, and
xxxxxxxxxxxx the cancellation of the registration to some sections of
Industry and Commerce Administration, return the Business
Certificate, and issue a notice to the public.
NO. 76 -
After the Joint Venture is terminated, each party will keep one copy
of each of the various accounting books.
CHAPTER 11: RULES AND REGULATIONS
NO. 77 -
The Joint Venture's Rules and Regulations as stipulated by the
Board of Directors consists of:
1. Business Management, including each sections' authorities
and weekly regulations.
2. Worker's Rules.
3. Wages.
4. Worker's Attendance Record, Promotion Record, and Reward
and Disciplinary Record.
5. Worker's Welfare.
6. Financial Affairs.
7. Liquidation Procedure for when the Joint Venture will
terminate.
8. Others.
CHAPTER 12: ADDENDUM
NO. 78 -
Amendment of these regulations must be and discussed and passed by the
Board of Directors, and approved by the original approval
organizations.
NO. 79 -
The language of these regulations are written in Chinese characters.
NO. 80 -
These regulations will be valid after approval by the Shenyang
Development Zone Management Committee.
THE FIRST PARTY: THE SECOND PARTY:
CHINA NORTHEAST GENERAL NORTHEAST (USA) CORP.
PHARMACEUTICAL FACTORY
Representative: Representative:
Hong Yun Shi Yi Hui Luo
May 19, 1994 May 20, 1994
<PAGE>
ANNEX 1
1. In Shenyang United Vitatech Pharmaceutical Ltd.'s contract and regulations:
RMB cash 2,570,000 yuan invested by Tian Fa Company is included in cash
US$2,100,000.00 invested by the second party. It will be issued with
individual stock as a value of US$450,000.00 or invested with capital stock
as a value of US$300,000.00
2. The President of China Northeast General Pharmaceutical Factory, Comrade
Hong Yun Shi will be engaged as Chairman in honor of Shenyang United
Vitatech Pharmaceutical Ltd.
THE FIRST PARTY: THE SECOND PARTY:
CHINA NORTHEAST GENERAL NORTHEAST (USA) CORP.
PHARMACEUTICAL FACTORY
Representative: Representative:
Hong Yun Shi Yo Hui Luo
May 19, 1994 May 20, 1994
<PAGE>
ANNEX II
In Shenyang United Vitatech Pharmaceutical Ltd.'s contract and
regulations, the price of special technology is considered as $350,000 in the
Second Party investment. After it is evaluated by the legal department, if the
amount is not enough, it will be compensated with cash, if exceeded, the excess
amount will be considered as a Second Party increased proportion in investment.
THE FIRST PARTY: THE SECOND PARTY:
CHINA NORTHEAST GENERAL NORTHEAST (USA) CORP.
PHARMACEUTICAL FACTORY
Representative Representative
Hong Yun Shi Yi Hui Luo
May 19 ,1994 May 20, 1994
Exhibit 10.5
AGREEMENT
AGREEMENT made and entered into this 26 day of December, 1993, between
MANNION CONSULTANTS LTD., a coporation with its principall office located at No.
2 4th floor, Alley 23, Lane 290, Chung Shan North Road, Section 6, Taipei,
Taiwan, R.O.C. (hereinafter referred to as PARTY OF THE FIRST PART/TRANSFEROR),
and NORTHEAST (USA) CORP., a duly organized and existing incorporation under the
law of the State of New York, with its principal place of business at 505
Northern Blvd. Suite 168, Great Neck, New York 11023 (hereinafter referred to as
PARTY OF THE SECOND PART/TRANSFEREE)
WITNESSETH
WHEREAS, PARTY OF THE FIRST PART has been conducting pharmaceutical
research and development under the name and style of Mannion Consultant Ltd. in
British Virgin Island, and is the owner of the technology hereinafter described;
and
WHEREAS, PARTY OF THE SECOND PART is a duly organized corporation with
an aggregated number of shares amounting to 200 shares of one class only of no
par value; and
WHEREAS, PARTY OF THE FIRST PART is desirous in transferring, and
conveying some of its own technology, hereinafter described to PARTY OF SECOND
PART in exchange for 80 shares stock of PARTY OF THE SECOND PART; and
WHEREAS, the directors of PARTY OF THE SECOND PART have found that the
technology hereinafter described is of the fair value of $1,600,000.00, and said
exchange for 80 shares of stock of the corporation is entirely reasonable and is
necessary to enable the corporation to carry out its objects, as set forth in
its certificate of incorporation:
NOW THEREFORE, it is hereby agreed by the parties hereto that:
(1) FOR VALUABLE CONSIDERATION, PARTY OF THE FIRST PART do hereby
transfer, and assign to PARTY OF THE SECOND PART. the following fully described
technology:
Intensive Serum Formulation for day and night use (Softgel
Encapsulation) Vitamin C SWEETLET Chewable Tablet Formulation and
Procedure Multivitamin Chewable (Sugarless) Tablet Formulation and
Procedure Prenatal Vitamin Tablet Formulation and Procedure
Multivitamin with Minerals Tablets Formulation and Procedure C-90, C-95
Formulation and Procedure B-Carotene Drink Formulation and Procedure
(2) PARTY OF THE FIRST PART represent and warrant that they are the
lawful owners of the hereinabove described technology to be, and that at the
time of execution of this Agreement, such technology is owned by them free and
clear of all liens, encumbrances, charge, assessments, an with the unrestricted
right to transfer any and all of the technology of PARTY OF THE SECOND PART as
provided for in this Agreement.
(3) PARTY OF THE SECOND PART hereby further represents and warrants
that it has a total 200 shares authorized capital stock of no par value, of
which 20 shares are issued and outstanding; and that the Corporation has no
other class of stock apart from the shares referred to herein; and that there
have never been and are not now any outstanding warrants or options issued with
respect to the no par value shares of the Corporation.
(4) It is further agreed that the execution delivery and performance of
this Agreement by both parties will not constitute a default under any covenant
or agreement to which either is a party or a violation of any law, rule or
regulation to which either party is subject and that such execution, delivery
and performance shall be a full discharge of each of the parties hereto to the
extent thereof.
(5) Upon execution of this Agreement, each party shall become solely
liable for all future costs and obligations relating to their respective
transfers and assignments.
(6) This Agreement supersedes all agreements, oral or written, made
between the parties hereto relating to this subject matter.
(7) This Agreement shall be binding upon the parties hereto, their
heirs, executors, administrators and assigns and upon succeeding shareholders as
well.
<PAGE>
IN WITNESS WHEREOF, we have hereunto set our hands and affixed our
signatures, the day and year first above written.
IN THE PRESENCE OF: FOR PARTY OF THE FIRST PART
(TRANSFEROR)
- ------------------------ ------------------------------
Witness Ting-Hui Lin
President
Mannion Consultant, Ltd.
FOR PARTY OF THE SECOND PART
- ------------------------ ---------------------------------
Jennifer Lo
Chairperson
Northeast (USA) Corp.
